Is Medicare Advantage the Answer to High Drug Costs?

Posted on by John C. Goodman

Average annual deductibles in Part D prescription drug plans (PDPs) are roughly four times higher than those in Medicare Advantage drug plans (MA-PDs) ($398 versus $90). Average monthly premiums for PDPs are also roughly 3.5 times higher than in MA-PDPs ($40 versus $11). Similarly, MA-PDP formularies cover a higher share of potentially coverable Part D drugs than PDPs (89 percent compared to 83 percent). At the same time, MA-PDPs impose utilization management requirements (such as prior authorization and quantity limits) on formulary covered drugs at a lower rate, relative to PDPs.

Benedic N. Ippolito and Boris Vabson, AEI

1 thought on “Is Medicare Advantage the Answer to High Drug Costs?”

  1. I still think the “answer” to high drug costs won’t be found by fooling around with insurance, whether government (Medicare) or private (Medicare Advantage).

    If insurance were the answer, U.S. would have enjoyed stabilized medical costs soon after January 1, 1966, the day Medicare became effective. Instead, medical costs are much much higher today, and medical insurance premiums also much much higher.

    My opinion: it has been a mistake for policy wonks and political leaders not to analyze, and talk separately about, cost vs. subsidies of cost (i.e., insurance). I know these are smart people, so I can’t explain this mistake. Nevertheless, that mistake has led to treating the symptom (price of insurance) instead of treating the disease (the cost of drugs). That always ends up in arguments over the allocation of costs to different people. It does not produce ways to reduce overall costs in the first place,

    Because it diverts attention from investigating how to substantially reduce the cost of medical delivery. Nor can it evaluate whether substantial reductions to the cost of medical delivery are even possible.

    Reply

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