Medicare Prescription Drug Legislation: Comparison of Actuarial Values

Publication Date: December 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

Type:

Abstract:

On December 8, 2003, the "Medicare Prescription Drug and Modernization Act of 2003" was signed into law (H.R. 1, P.L. 108-173). The law adds Part D to Medicare, which establishes a new prescription drug benefit that begins in 2006. This report compares the actuarial values of the prescription drug benefit under the law's standard coverage and the coverage available to certain low-income beneficiaries. The actuarial values of private drug coverage presently available to seniors were also estimated. The actuarial values of the Part D coverage for low-income beneficiaries were greater than all of the private plans that were modeled. The actuarial value of the prescription drug benefit in the Part D standard coverage was greater than the prescription drug benefit in the individually purchased Medigap supplemental plans but was less than the typical prescription drug benefit in employment-based coverage and in the plan with the greatest enrollment among federal employees, retirees and dependents.