Hospital Spending Down Now That Medicare Foots Prescription Drug Bill

Medicare has been paying for its beneficiaries’ prescription drugs since January 2006, and a new study finds that this change has had a large fiscal effect on nursing homes and hospitals.

The study–published in The Journal of the American Medical Association by researchers at Harvard Medical School in Boston–determined that spending on hospital and nursing home stays is down now that Medicare Part D has made it easier for seniors to manage health problems on their own.

“It seems to have helped keep seniors out of the hospitals, which has helped reduce spending,” said Dr. J. Michael McWilliams of Harvard Medical School in an interview with Reuters. “It’s highly suggestive that Part D improves the cost-effectiveness of the Medicare program.”

Medicare Part D was proposed in 2003 and put into effect in 2006. Reuters points out that the legislation has been controversial—with some arguing that it’s only added to the national debt and others saying that the program lacks funding.

The Harvard study also found that Medicare beneficiaries appear to have saved approximately $1,200 annually following Part D.

Four-and-a-half million Americans were enrolled in Part D plans last year, receiving an average of $1,789 in benefits.

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Do you believe Medicare Part D was a worthwhile addition to the Medicare program?

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