Closing the Medicare Part D Coverage Gap Affects Costs and Medication Use for Medicare Beneficiaries

Background:  Under the Affordable Care Act (ACA), Medicare will gradually close the prescription drug coverage gap by 2020. Medicare beneficiaries used to pay 100% of drug costs in the donut hole before the ACA. Starting in 2011, Medicare began to pay 50% of brand-name drugs in the coverage gap. This gradual closure of coverage gap will have a huge impact on the medication use, costs and health outcomes for Medicare beneficiaries. However, there is a lack of study that utilizes data on the actual medication use after ACA by Medicare beneficiaries to examine those effects. This study will utilize the national Medical Expenditure Panel Survey (MEPS) data to explore those effects.

Methods: MEPS data in 2011-2013 were used in this study, which included 10,601 and 22,162 person-years of Medicare beneficiaries and privately insured individuals respectively. By insurance coverage, Medicare beneficiaries were grouped into Medicare only, Medicare+private insurance, and Medicare+other public insurance.

Results:  The percentage of Medicare payment out of the total medication costs increased from 62% in 2011 to 72% in 2013 for patients with Medicare only.  That number increased from 34% to 51% for patients with Medicare plus private insurance, and from 81% to 88% for patients with Medicare plus other public insurance. In contrast, the private insurance payment went down from 66% in 2011 to 60% in 2013 for people with private but no Medicare insurance. Though, the average total medication costs increased for Medicare beneficiaries after the ACA, the actual amount paid by Medicare beneficiaries themselves decreased over time. The average number of prescription drugs increased slightly for Medicare beneficiaries, whereas it dropped a little for privately insured. Insurance type is a significant factor in determining the out-of-pocket payment.  

Conclusions:  After the ACA, Medicare beneficiaries had a lower percentage and lower dollar amount of out-of-pocket payment, and they used more prescription drugs, probably as a result of the removal of cost barriers by the gradual closure of the Medicare part D coverage gap. The Medicare payment increase occurred both in traditional Medicare and Medicare Advantage plans.