This time of year brings on a sense of nostalgia for me related to the Medicare prescription drug benefit (Part D). Back in 2005, I had just started working at Avalere and we got our first data on what plans were offering for the inaugural year of the benefit. I remember launching into the file and working to make sense of it all. In policy, unlike parenting, it is okay to have your favorite. I’m pretty partial to Part D.
While the Medicare program has been around since 1965, beneficiaries did not have a prescription drug benefit until the Medicare Modernization Act of 2003 was passed and the benefit began in 2006. But 2006 to 2023 – that’s a lot of time for the benefit to evolve so I thought I’d do a series of snapshots on how the benefit has changed.
Today’s look is at enrollment. Part D has two primary ways that beneficiaries can access the benefit – 1) Standalone prescription drug plans (PDPs) and 2) Medicare Advantage prescription drug plans (MA-PD plans). PDPs are unique and, when the Medicare Modernization Act passed, no one knew if private plans would step up and offer them in the market (spoiler alert – they did). They are insurance plans that only cover prescription drugs. MA-PD plans integrate medical and prescription drug coverage and are theoretically more inclined to think about the whole person in their coverage decisions because of this dual responsibility.
At the start of the benefit there were more beneficiaries enrolled in the PDP plans but, over the years, beneficiaries began moving into the MA-PD plans mirroring the transition to managed care in traditional Medicare. MA-PD plans are better marketed and are able to offer lower premiums because of the connection to the medical benefit. It should also be noted that beneficiaries are increasingly comfortable with managed care.
In 2006, we also had a number of beneficiaries that were covered by their employers through the retiree drug subsidy. Over time, most employers moved retirees into covered PDP and/or MA-PD plans.
There are still about 10% of Medicare enrollees that do not have drug coverage.