Issues in Designing
a Prescription Drug Benefit
for Medicare |
| October 2002 |
Note
Numbers in the text and tables of this study may not add up to totals because of rounding.
|
Medicare offers broad insurance protection for many
health needs of the nation's elderly and disabled residents, but it provides
no coverage for the costs of most outpatient prescription drugs. As spending
for those drugs has soared in recent years, adding a prescription drug
benefit to Medicare has become a top health issue for lawmakers. However,
designing such a benefit as a freestanding addition to the existing Medicare
program has proved difficult--in part because the design choices involve
trade-offs among a number of competing policy goals.
This Congressional Budget Office study discusses CBO's approach to estimating
the costs of various designs for a Medicare prescription drug benefit.
The study describes the broad choices available to policymakers, some problems
raised by particular design choices, and the implications of those choices
for the cost of four specific proposals, which together cover a wide spectrum
of approaches for delivering a Medicare drug benefit. In keeping with CBO's
mandate to provide objective, impartial analysis, this study makes no recommendations.
The study was written by current and former staff members of CBO's Health
and Human Resources Division and Budget Analysis Division, including Joseph
Antos, James Baumgardner, Jennifer Bowman, Kathleen Buto, Julia Christensen,
Sandra Christensen, Jeanne De Sa, Eric Rollins, Rachel Schmidt, Sarah Thomas,
and Judith Wagner. Kate Bloniarz, Samuel Kina, and Daniel Wilmoth provided
valuable assistance. Steven Lieberman and Deborah Lucas of CBO provided
helpful comments on drafts of the report, as did Bryan Dowd of the University
of Minnesota, Richard Frank of Harvard University, and Robert Reischauer
of the Urban Institute. (The assistance of external reviewers implies no
responsibility for the final product, which rests solely with the authors
and CBO.)
Christian Spoor integrated the contributions of the authors into a single
edited text. Christine Bogusz proofread the study. Ronald Moore produced
drafts of the manuscript. Kathryn Winstead prepared the study for publication,
and Annette Kalicki prepared the electronic versions for CBO's Web site.
Dan L. Crippen
Director
October 2002
| Tables |
| |
|
| S-1. |
Provisions of Four Prescription Drug Proposals for Medicare |
| S-2. |
Federal Costs of Four Prescription Drug Proposals, 2005-2012 |
| 1. |
Prescription Drug Spending and Medicare Benefits per Beneficiary, 2003-2012 |
| 2. |
Prescription Drug Spending by or for Medicare Beneficiaries, 2005 |
| 3. |
Medicare Beneficiaries' Prescription Drug Coverage, 1999 |
| 4. |
Medicare Beneficiaries' Prescription Drug Coverage and Spending, by
Income Level, 1999 |
| 5. |
Provisions of Four Prescription Drug Proposals for Medicare |
| 6. |
CBO's Assumptions for Four Prescription Drug Proposals |
| 7. |
Federal Costs of Four Prescription Drug Proposals, 2005-2012 |
| |
|
| Figures |
| |
|
| 1. |
Spending for Social Security, Medicare, and Medicaid, 2000-2030 |
| 2. |
Sources of Payment for Medicare Beneficiaries' Prescription Drugs, 1999 |
| 3. |
Hypothetical Structure of a Medicare Prescription Drug Benefit |
| 4. |
The Role of PBMs in the Flow of Money and Prescription Drugs |
| |
|
| Boxes |
| |
|
| 1. |
The Feasibility of Risk Adjusting the Drug Benefit in Competitive Plans |
| 2. |
How a Medicare Drug Benefit Would Interact with Supplemental Drug Coverage |
| 3. |
State Insurance Laws That Affect Prescription Drug Plans |
|
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