Medicare Part D

A Successful Start with Room for Improvement Spending

Published In: JAMA, The Journal of the American Medical Association, v. 299, no. 16, Apr. 2008, p. 1954-1955

Posted on RAND.org on January 01, 2008

by Dana P. Goldman, Geoffrey F. Joyce

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Medicare Part D represents a bold experiment to publicly fund, but privately sell and administer, prescription drug insurance. Part D is only a relatively small part of the overall Medicare program; Medicare spent $432 billion overall in 2007, of which Part D accounted for only 11.6% ($50 billion). However, the Medicare program is so large that Part D alone should account for 1% of the entire economy in less than 2 decades. Furthermore, there is little room for more spending, given the trustees' recent forecast of $12 trillion in unfunded liabilities over the next 75 years--a debt just slightly smaller than the entire US economy. So much appears to be riding on Part D's success or failure, including possible models for the provision of health insurance to the currently uninsured. Two articles in this issue of JAMA raise important concerns.

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