Medicare Part D in 2016 and Trends over Time

Section 1: Part D Enrollment and Plan Availability

Since 2006, the share of Medicare beneficiaries enrolled in a Part D plan has increased from 52 percent to 71 percent of all eligible Medicare beneficiaries.

• Nearly 41 million Medicare beneficiaries, or 71 percent of all Medicare beneficiaries nationwide, are enrolled in Part D plans, including plans open to everyone and employer-only plans designed solely for retirees of a former employer (Exhibit 1.1). The percent of Medicare beneficiaries with Part D coverage in 2016 varies by state, from 56 percent in Alaska to 89 percent in North Dakota (Exhibit 1.2).
• More than half (60 percent) of Part D enrollees are in PDPs, but enrollment in MA-PD plans has increased over time as a share of total Part D enrollment, from 28 percent in 2006 to 40 percent in 2016, roughly in line with overall growth in Medicare Advantage enrollment (Exhibit 1.3). In five states (Arizona, California, Florida, Hawaii, and Oregon), MA-PD plan enrollees account for over half of all Part D enrollees (Exhibit 1.4).
• In 2016, 6.6 million Medicare beneficiaries are enrolled in employer-only Part D plans (Exhibit 1.5). This number has grown rapidly since a change in the tax status of the federal retiree drug subsidy (RDS), which is available to employers that provide drug benefits directly to their retirees, took effect in the 2013 tax year. Only 1.9 million beneficiaries (down from 7.2 million in 2006) have drug coverage from employers that receive the RDS.

In 2016, three Part D sponsors account for more than half of all Part D enrollees.

• UnitedHealth, Humana, and CVS Health have enrolled half (52 percent) of all participants in Part D (Exhibit 1.6). This level of market concentration has increased modestly since 2006, but more so among PDPs. UnitedHealth and Humana have had large market shares since the program began, while enrollment in CVS Health has grown through acquisition of other plan sponsors (Exhibit 1.7).
• If the acquisition of Humana by Aetna is approved, the combined firm would account for 26 percent of total Part D enrollment in 2016 nationwide, without divestitures. But in seven regions, the combined firm would have between 40 percent and 50 percent of total Part D enrollment. This acquisition, along with the proposed acquisition of Cigna by Anthem, would increase market concentration. Two thirds of all regions (23 of 34) would be considered highly concentrated, based on the Herfindahl index, with respect to PDP enrollees who are not receiving Low-Income Subsidies (LIS), up from 10 of 34 regions today (Exhibit 1.8). The market for LIS enrollment would also become highly concentrated in more regions (15 post-acquisitions versus four today).
• The vast majority of PDP enrollees are in plans sponsored by firms participating in all or most all regions of the country (Exhibit 1.9). Firms offering plans in one or a few regions play a relatively small role in the program. MA-PD plans sponsored by local firms play a much larger role in that Part D market segment. Nationally, Blue Cross Blue Shield plans comprise 7 percent of PDP enrollment and 17 percent of MA-PD plan enrollment.
• The ten largest sponsors of Part D plans account for 80 percent of all enrollment (Exhibit 1.10), and have varying shares of enrollees in PDPs versus MA-PD plans (Exhibit 1.11). UnitedHealth, by itself, has maintained the top position for all 10 years of the program, and in 2016 provides coverage to more than one in five PDP and MA-PD plan enrollees, but CVS Health has the most PDP enrollees for the first time in 2016. At the individual plan level, SilverScript Choice PDP has the most enrollees in 2016, a position previously held by AARP MedicareRx Preferred PDP (Exhibit 1.12). Since 2006, PDP enrollment has grown substantially in some of the largest plan sponsors; in others, enrollment growth has been relatively flat (Exhibit 1.13).
• SilverScript Choice PDP has the most LIS PDP enrollees (Exhibit 1.14), while AARP MedicareRx Preferred PDP has the most non-LIS PDP enrollees (Exhibit 1.15).

The average Medicare beneficiary has a choice of 26 PDPs and 16 MA-PD plans in 2016.

• The average number of PDPs available to people on Medicare has dropped from a high of 55 plans in 2007 to 26 plans in 2016, which are offered by 13 different firms (Exhibit 1.16). The number of MA-PD plans per beneficiary in 2016 increased slightly from 2015, from 15 to 16 plans. The total number of stand-alone PDPs available in 2016—886 PDPs—is lower than in any previous year (Exhibit 1.17).

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Section 1: Part D Enrollment and Plan Availability

exhibits

Medicare Part D Enrollment (in Millions), by Plan Type, 2006-2016

Percent of Medicare Beneficiaries Enrolled in Medicare Part D Plans, by State, 2016

Distribution of Medicare Part D Enrollment, by Plan Type, 2006-2016

Percent of Medicare Part D Enrollees in Stand-Alone PDPs, by State, 2016

Enrollment in Employer-Only Medicare Part D Plans and the Retiree Drug Subsidy (in Millions), by Plan Type, 2006-2016

Distribution of Medicare Part D Enrollment, by Firm, 2016

Distribution of Medicare Part D Enrollment, by Firm and Plan Type, 2006 and 2016

Number of Medicare Part D Regions, by Level of Market Concentration for LIS and Non-LIS Enrollees, 2016

Distribution of Stand-Alone PDP Enrollment, by National/Near-National Plan Availability, 2016

Top 10 Firms Offering Medicare Part D Plans Ranked by 2016 Enrollment

Distribution of Enrollment in Top 10 Firms Offering Medicare Part D Plans, by Plan Type, 2016

Top 10 Medicare Part D Plans Ranked by 2016 Enrollment

Enrollment in Medicare Part D Stand-Alone PDPs Offered by Major PDP Sponsors, 2006-2016

Top 5 Medicare Part D Stand-Alone PDPs for LIS Enrollment in 2016

Top 5 Medicare Part D Stand-Alone PDPs for Non-LIS Enrollment in 2016

Average Number of Medicare Part D Plans Offered to Enrollees, 2006-2016

Number of Medicare Part D Stand-Alone Prescription Drug Plans, 2006-2016