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Medicare payments for outpatient prescription drugs jumped by more than $38 billion in 2006

Research Activities, June 2009, No. 346

Medicare payments for outpatient prescription medications climbed by more than $38 billion in 2006 compared with 2005, according to data from the Agency for Healthcare Research and Quality (AHRQ). 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 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 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.

These findings are based on data from the Medical Expenditure Panel Survey (MEPS), a detailed source of information on the health services used by Americans, their frequency and cost, and sources of payment. For more information, go to Prescription Drug Estimates for Medicare Beneficiaries, 2005 and 2006, MEPS Statistical Brief #240, on the MEPS Web site at http://meps.ahrq.gov/mepsweb/data_stats/Pub_ProdResults_Details.jsp?pt=Statistical%20Brief&opt=2&id=899.

Current as of June 2009
Internet Citation: Medicare payments for outpatient prescription drugs jumped by more than $38 billion in 2006: Research Activities, June 2009, No. 346. June 2009. Agency for Healthcare Research and Quality, Rockville, MD. http://archive.ahrq.gov/news/research-activities/jun09/0609RA45.html