You must be quoting from the findings brief and not the study itself. The latter would provide a far more thorough explanation of the work and would explain, with references, all assumptions and limitations, including issues pertaining to Medigap.

The subsidy rate for Part D has not changed. If prices have gone up that is due in large part to inflation in the underlying costs and/or competitive effects.

The study…..”found that beneficiaries are more likely to select a PDP if they are better educated, in fair or poor health (heart problems, diabetes, Alzheimer’s or emphysema), have insurance through a spouse, have high lagged drug spending or high incomes. The researchers suspect that these types of individuals have the resources to purchase less restrictive coverage on their own. The results demonstrate that Medicare beneficiaries, who have health problems but have financial means, tend to select a PDP instead of an HMO.”

I don’t need a PhD to come up with that conclusion. People who have more education have more money and they choose a PDP AND a Medicare Supplement. Leaving out the cost of the Med Supp makes this study questionable me. Low-income seniors cam’t afford a Med Supp PLUS a drug plan.

The summary goes on to say that “The researchers determined that the addition of subsidized stand-alone prescription drug plans produced nine times as much value for beneficiaries per government dol¬lar as the increase in payments to HMOs.”

What percentage of the 12,700 Medicare beneficiaries were living on $1,000 to $1500 per month? Sure, people with money who take medications are willing to pay for a PDP. This is because they NEED the PDP. And they can afford the PDP. AND they have their Med Supp. So they are all set, no matter what terrible illness might befall them. I recommend this kind of coverage to my clients. Unfortunately, the 76 year old lady in Yuma, AZ who called me the other day cannot afford a Med Supp AND a PDP. Her MA PPO premium is going up to $88 per month – but it does include a PDP that would cost $45 as a stand-alone, so maybe it’s not the rip-off I originally thought.

I would also like to ask how much PDPs are subsidized and if the level of subsidy has changed over the last three years? Stand-alone PDPs were $15/ month in 2006. That was a good deal. In subsequent years the premiums went up to where they are now $35 for the AARP Part D, $42 for Humana. Last year, Health Net had the best priced plan at around $32/month. But for 2010 the Health Net premium will go up to $59. So has the subsidy changed?