The Efficiency of Medicare Part D

TCC has long argued that Medicare Part D should be a model for reforming government programs. In December 2014, we sent a letter to Republican members of the Texas delegation in which we urged them to preserve the market-oriented aspects of Part D that make it work so well. In it, we argued:

The Medicare Part D prescription drug benefit plan has been a successful program by any measure.  A decade has gone by since Part D’s creation, and now 95 percent of Medicare beneficiaries receive comprehensive drug coverage with which they are satisfied. Taxpayers have come out ahead as well.  Part D’s total costs and premiums have been consistently lower than projected.  Analysis by the Congressional Budget Office shows that Part D has cost $349 billion (45%) less than initially projected.  This is a rare positive outcome from a government program, largely attributable to Part D’s market-centered pricing mechanisms and its “non-interference” clause, which prohibits the government from interfering in private price negotiations between Medicare Part D plans, drug manufacturers, and pharmacies.

Nearly one year later, Part D’s success story continues. It is highlighted in a recent Forbes article by Merrill Matthews, which we urge you to read.