Medicare Rx Spending Up $38 Billion in Year One of Medicare Part D Program

In 2006 the year the nation’s Part D prescription drug program began, Medicare’s share of outpatient prescription medications increased by $38 billion over 2005 according to the Agency for Healthcare Research and Quality. Prior Medicare drug coverage was limited to certain beneficiaries, such as people with who required dialysis or a transplant due to severe kidney disease. AHRQ’s analysis found that between 2005 and 2006:
  • Medicare spending for outpatient prescription drugs rose from $5.9 billion to $44.3 billion.
  • Medicare’s share of the Medicare population’s overall drug spending increased from about 7 percent to 45 percent.
  • Medicaid’s share of the Medicare population’s drug spending fell from 15.5% to about 1%; private insurance’s share fell from nearly 25% to 16.5%.
  • The proportion of Medicare beneficiaries that had one or more payments by Medicare for one or more Rx drug purchases rose from 21% to nearly 69%.
  • (Source Data derived from the Medical Expenditure Panel Survey (MEPS).