The Vast Majority Of Medicare Part D Beneficiaries Still Don’t Choose The Cheapest Plans That Meet Their Medication Needs

Abstract

The Medicare Part D program allows beneficiaries to choose among Part D plans administered by different health plans in order to encourage market competition and give beneficiaries more flexibility. Currently around 40–50 Part D plans are available per region. When faced with so many options, do beneficiaries generally choose the least expensive plan? Using 2009 Part D data, we found that only 5.2% of beneficiaries chose the cheapest plan. Nationwide, beneficiaries on average spent $368 more annually than they would have spent under the cheapest plan available in their region, given their medication needs. Beneficiaries often overprotected themselves by paying higher premiums for plan features they did not need, such as generic drug coverage in the coverage gap. Our findings suggest that beneficiaries need more targeted assistance from the government to choose plans, for example, a customized letter indicating three top plans based on beneficiaries’ medication needs.