Evaluating the success of Medicare Part D and its impact on Medicare beneficiaries

Medicare Part D began providing prescription drug coverage to Medicare beneficiaries in 2006. It is essential to examine how the program impacts seniors' demand for prescription drugs, health outcomes and overall healthcare costs. This research paper analyzes how Part D affects beneficiaries' expenditures on prescription drugs and the number of prescriptions they use. Additionally, this paper explores whether Part D insurance and satisfaction with a healthcare provider influence the demand for prescriptions and the likelihood of being in the Part D coverage gap, or "doughnut hole". The analysis uses Medical Expenditure Panel Survey (MEPS) Full Year and Prescription Drug Files for 2004 through 2007. The results suggest that Part D and provider satisfaction impact beneficiaries demand for prescription drugs, but they do not significantly impact demand for drugs to treat a serious chronic illness like diabetes. For seniors without diabetes, but not those with diabetes, this study found that Part D coverage increases the likelihood of being in the coverage gap. The results also indicate that provider satisfaction increases the likelihood of being in the doughnut hole. Part D is a relatively new benefit, and the program appears to increase seniors demand for prescriptions. Hopefully, Part D will improve long-term health outcomes in addition to expanding access to prescription drugs.