Medicare Prescription Drugs: Making the New Program Work

Abstract

This paper reports on the progress that has been made and questions that have been raised about the new Medicare prescription drug benefit that became law in late 2003. The focus is on issues raised during the National Medicare Prescription Drug Congress held in Washington, DC, in February 2004. The first phase of the program, the discount drug card, became effective on schedule in May and June 2004, but this initial step did not end the ongoing partisan debate about whether the new legislation is a significant positive development for seniors or whether it will work as intended. Most questions about the logistics and operation of the prescription drug program will remain unanswered until the second - and more expensive - phase of the program (government-subsidized prescription drug insurance) begins in 2006. It is still unclear how many firms will offer to provide prescription drug insurance under the Medicare program in 2006 because it is a new and untested product.

Keywords: Medicare, Prescription drug costs, Prescription drug plans

JEL Classification: H51, I11, I18, J14