Everyone complains about the prices of prescription drugs. Yet, 60 percent of us use them, because they help relieve our pain, improve the quality of our lives, and extend our lifespans. The older we are, the more prescription drugs we consume — and not only because older people usually have more healthcare issues. Equally important, older Americans have guaranteed access to Medicare-backed private insurance coverage for their prescriptions through Medicare Part D plans.
My advice for Medicare “reformers” emboldened by the recent elections is to keep your hands off Part D. Here’s why: Prescription drugs can now treat millions of people for conditions that otherwise would require other costly medical procedures and services, saving taxpayers tens of billions of dollars.
Last week, the Progressive Policy Institute published a new analysis I did of the operations and finances of the Part D program. We reviewed the many, many studies that have investigated the effectiveness and costs of prescription drugs. One particularly extensive analysis found that each prescription filled or refilled by a Medicare beneficiary lowered other healthcare costs by $104 in 2000, or by $173.61 in 2014. We also know from the Kaiser Family Foundation that Americans ages 65 and older fill and refill prescriptions, on average 27.9 times per year.
Based on these findings, I estimate that the use of prescription drugs by the 23.4 million Americans people covered by Part D plans in 2014 saved the Medicare system an average of $4,844 each, or $113.5 billion altogether. Because Medicare Part D cost taxpayers $68.4 billion in 2014, this access to prescription drugs saved taxpayers $69.6 billion in 2014, on a net basis. Include as well the 14.4 million beneficiaries with drug coverage through Medicare Part C Advantage plans, and the use of prescriptions drugs by Medicare beneficiaries in 2014 produced a net savings for taxpayers of $110.2 billion. This is compelling evidence that misguided efforts to cut federal support for Part D and Part C would cost lives and drive up Medicare costs.
To learn more, go to The Value of the Part D Program for Its Beneficiaries and the Medicare System.