Medicare and the Prescription Drug Benefit

1
Medicare and the Prescription Drug Benefit

• Atlanta Conference
• Morehouse School of Medicine
• October 6, 2006
• Bob Rosenblatt, Senior Fellow, NASI

2
Basics of Medicare

• 2006 43 million beneficiaries
• 2030 79 million beneficiaries
• 2005 Medicare is 2.7 of Gross Domestic Product
  (GDP)
• 2050 Medicare projected at 9.0 of GDP

3
How the Money is Spent

• 330 billion in benefits in 2005 includes
• 145 billion for Hospitals
• 58 billion for Doctors
• 47 billion for Medicare HMOs
• 19 billion for skilled nursing facilities
• 13 billion for home health care

4
Spending is Concentrated

• In 2002, 47 of beneficiaries had costs of less
  than than 1,000. They accounted for only 2 of
  total Medicare outlays.
• A small group, 7 of beneficiaries, had costs of
  25,000 or more. They accounted for 53 of total
  Medicare outlays.

5
Medicare Part D

• New drug benefit began January 1, 2006
• Estimated cost will be 400 billion from
  2006-2016
• Enrollment is voluntary
• More than 38 million 90 of Medicare
  beneficiaries- now have drug coverage

6
Reviews of the program

• Kaiser poll says more than 80 of people enrolled
  in a plan are satisfied. But 18 say they have
  had a major problem with the plan.
• Difficulties include unexpected costs, having to
  switch drugs, leaving pharmacy without a
  prescription.

7
More Reviews of Program

• Kaiser polling
• 86 of pharmacists and 71 of doctors say the
  program helps people save money on their
  medications
• BUT
• 91 of pharmacists and 92 of doctors say the law
  is too complicated

8
Key issues

• Donut hole-gap in coverage- will impact more than
  three million people this year.
• Millions of low income people eligible for
  financial help with coverage are hard to reach.
• Will many plans leave the business in 2007?
• Impact of Wal-Mart generic drug bargains