NCPA - National Center for Policy Analysis


January 2, 2007

Millions of seniors say they are happy with the Medicare drug benefit, which cost the federal government about $30 billion in 2006.

The drug coverage has often been described as the biggest change in Medicare in the program' 40 years.  Under the program, seniors and the disabled enroll in a private plan. They pay a monthly premium to the plan.  The government also pays the plan:

  • The Bush administration estimates that the coverage saves the average beneficiary about $1,200. 
  • Overall, about 22.5 million people enrolled in private plans during the programs first year.
  • Nearly 7 million more people get their medicine through their employer, and those employers get a tax credit for providing that coverage.
  • That total of nearly 30 million getting coverage through Part D is much less than was originally projected, however, analysts also didn't realize that so many seniors had insurance coverage for their medicine through other programs.

The Bush administration acknowledges the program got off to a rough start as hundreds of thousands of people showed up in pharmacy computers as not being enrolled in a plan.

Herb Kuhn, deputy administrator at the Centers for Medicare and Medicaid Services, said his biggest concern going into the new year are those beneficiaries who waited until the final days of the open-enrollment period to change drug plans.  He said seniors should bring to the pharmacy any kind of identification or acknowledgment letter from their plan that would show proof of membership.

Overall, Kuhn said that 2006 was a good year for beneficiaries.

"We believe it's been a very positive year for Part D," he said. "As a result of the new program, beneficiaries are living better.  They're saving money."

Source: Kevin Freking, "Millions save money on Medicare program," Associated Press/San Jose Mercury News, January 1, 2007.

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