The burden of Part D: Does the Medicare drug benefit affect the percentage of income senior citizens spend out-of-pocket

In 2006, a prescription drug benefit was added to the Medicare program, which attempted to lessen the out-of-pocket costs associated with the use of prescription drugs for senior citizens. To date, over 27 million Medicare beneficiaries are enrolled in Part D plans, illustrating the enhanced access to prescription drugs created by this benefit. Much literature has been published on the effect of the drug benefit on the costs borne by senior citizens, but it has been largely inconclusive and has not focused on the percentage of income spent out-of-pocket, nor has it focused on specific demographic groups, passing over the understanding that these programs affect different groups differently.;However, what is certain is that out-of-pocket spending decreases the likelihood that senior citizens are compliant with their medical care, highlighting the necessity for manageable out-of-pocket costs for both prescription drugs and other medical expenses. Therefore, the analysis of whether the recently created Medicare drug benefit affects senior citizen's percentage of income spent out-of-pocket both on drugs and other health care expenditures is important in our efforts to improve the health outcomes of senior citizens, as well as assessing whether this benefit was successful in helping to insulate this population from financial ruin from medical expenditures.;Using data from the 2005-2007 Medical Expenditure Panel Surveys, this paper uses logistic regression to examine whether the Medicare Part D benefit affected the likelihood that a senior citizen spends 20% or more of their income on drugs and other medical expenses. The results of this study indicate that the addition of a prescription drug benefit decreased the odds that a senior citizen spends more than 20% of their income on both drug and other medical expenses by 43% and 41%, respectively. The results also indicate that this effect is especially significant for blacks in Medicare as compared with others, with blacks having 25% lower odds than non-blacks of having a 20% drug burden. However, the analysis also shows that more targeted outreach must be carried out in the future towards groups, such as Hispanics, that have not seen a significant reduction in their health and drug burden.