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Choosing a Medicare Part D Plan: Are Medicare Beneficiaries Choosing Low-Cost Plans?

Since 2006, Medicare beneficiaries have had the opportunity to choose from among dozens of plans to get the Part D prescription drug benefit, facing wide variation in benefits, premiums and cost-sharing. The array of choices, with more than 50 stand-alone drug plans in many states, could allow beneficiaries to select a plan that provides the best value for their individual medical and economic needs.

This study uses actual pharmacy claims experiences, and premium and cost-sharing information about Medicare prescription drug plans, to look at whether seniors chose the lowest-cost plan for them, based on their drug claims for 2005. The analysis models the approach seniors were advised to follow in choosing a plan based on their current medication regimen and finds that most Part D enrollees did not choose one of the lowest-cost drug plans offered in their area in 2006.

The study was written by Massachusetts Institute of Technology economist Jonathan Gruber on behalf of Foundation. It examines retail pharmacy claims from 2005 and 2006 for Part D enrollees ages 65 and older, gathered by the Wolters Kluwer company. In addition to examining 2006 plan choice based on 2005 claim experience, the study also examined the seniors' choices assuming “perfect foresight” in predicting their 2006 prescription needs, and in a hybrid methodology that evaluated the lowest-cost plans under either model.

Report (.pdf)