Medicare payments for outpatient prescription medications jumped $38 billion between 2005 and 2006

Apr 13 2009

Medicare payments for outpatient prescription medications increased by more than $38 billion when comparing 2005 and 2006 data, according to the latest News and Numbers from the Agency for Healthcare Research and Quality.

Medicare offered prescription drug coverage to all Medicare beneficiaries beginning in January 2006 with the implementation of Medicare Prescription Drug Coverage or Medicare Part D. Prior to January 2006, Medicare prescription 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 of outpatient prescription drug spending 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.
• In contrast, Medicaid's share of the Medicare population's drug spending decreased from 15.5 percent to about 1 percent, and private insurance's share fell from approximately 25 percent to 16.5 percent.
• The proportion of Medicare beneficiaries that had one or more payments by Medicare for one or more prescription drug purchases rose from about 21 percent to nearly 69 percent.

AHRQ, which is part of the U.S. Department of Health and Human Services, improves the quality, safety, efficiency, and effectiveness of health care for all Americans. The data in this AHRQ News and Numbers summary are taken from the Medical Expenditure Panel Survey (MEPS), a detailed source of information on the health services used by Americans, the frequency with which they are used, the cost of those services, and how they are paid. For more information, go to Prescription Drug Estimates for Medicare Beneficiaries, 2005 and 2006 ( http://www.meps.ahrq.gov/mepsweb/data_files/publications/st240/stat240.pdf ).