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Medicare Part D and Crowd-Out of Employer-Provided Drug Coverage

a PSC Small Fund Research Project

Investigator:   Helen Levy

The Medicare Part D drug benefit, which went into effect in 2006, included large subsidies to employers to continue providing prescription drug coverage to their Medicare-eligible retirees.
Nonetheless, employers still pay for more than two-thirds of these benefits, so that it is hard to believe that the existence of a publicly subsidized alternative - Part D - will not induce at least some employers to drop this coverage. Substantial "crowd out" of this kind has been associated with the expansions of the Medicaid and SCHIP programs. To the extent that public coverage crowds out private coverage, the program's effectiveness in reducing the number of individuals without coverage is diluted. The project will use data from the Medicare Current Beneficiary Study (MCBS) to estimate the impact of Medicare Part D on the provision by employers of private prescription drug insurance and retiree health benefits in general.

Funding Period: 04/01/2009 to 06/30/2010

Country of Focus: USA

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