Understanding the effects of Medicare prescription drug insurance

October 1, 2010

Understanding the effects of Medicare prescription drug insurance

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The Medicare Modernization Act became law in 2003, creating a prescription drug benefit for the elderly called Medicare Part D. At the time of its passage, approximately one-third of seniors did not have prescription drug coverage, leaving them prone to financial and medical hardships. About half of those without prescription drug insurance incurred out-of-pocket spending of $1,200 or more per year. Uninsured patients were also more likely to forego buying essential medications.  

Most researchers agree that prescription drug insurance is associated with an increase in use of prescription drugs. However, studies have provided a wide range of estimates of the magnitude of this increase. Significantly less research has studied whether prescription drug use is associated with decreased use of other health care services and/or the ultimate goal, improved health.


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Research Area: Health Policy

Policy Initiative: none

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