How Do Prescription Drug Benefits Differ Between Medicare Advantage and Stand-Alone Part D Drug Plans?

Benedic Ippolito and Boris Vabson
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Benedic Ippolito: American Enterprise Institute

AEI Economic Perspectives, 2024

Abstract: Medicare Advantage plans, which typically offer integrated medical and drug benefits through Medicare Advantage prescription drug (MA-PD) plans, face different incentives regarding drug coverage than do stand-alone prescription drug plans. We show that both plan types have similar expenditures on all Part D drugs, but MA-PD plans spend significantly more on supplemental benefits and premium buy-downs. MA-PD plans spend less on basic Part D drugs, despite covering them at higher rates. Spending on supplemental benefits goes largely toward non-targeted reductions to cost sharing, like lower deductibles. This is consistent with MA-PD plans using drug coverage primarily to boost overall enrollment, rather than to achieve targeted goals

Keywords: AEI Economic Perspectives; Prescription Drugs; Medicare; Anti-Obesity Drugs (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2024
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