Thesis Abstract

Abstract
The aim of this research project is to conduct a projected cost analysis of potential Medicare pharmacy plan designs. The rising cost of prescription drugs in the United States, coupled with the increasing proportion of the population eligible for Medicare, has made it imperative to evaluate the financial implications of different pharmacy plan structures under the Medicare program. By analyzing data on drug prices, utilization patterns, beneficiary demographics, and current Medicare spending on prescription drugs, this study seeks to estimate the potential costs associated with various pharmacy benefit designs. The methodology involves utilizing actuarial modeling techniques to project the costs of different pharmacy plan options over a specified time horizon. Various scenarios will be considered, including standalone prescription drug plans (PDPs), Medicare Advantage prescription drug plans (MA-PDs), and potential reforms such as capping out-of-pocket costs or negotiating drug prices directly with manufacturers. Sensitivity analyses will be conducted to assess the impact of different assumptions and variables on cost projections. The projected cost analysis will provide valuable insights for policymakers, insurers, and other stakeholders involved in Medicare pharmacy benefit design. By identifying the cost implications of different plan structures, this research aims to inform decision-making processes regarding the optimal design of Medicare pharmacy benefits. Furthermore, the findings of this study can contribute to the ongoing discussions on healthcare reform and efforts to make prescription drugs more affordable for Medicare beneficiaries. The results of this analysis are expected to shed light on the potential trade-offs between cost containment and access to medications for Medicare beneficiaries. Additionally, the findings may help policymakers assess the feasibility and sustainability of different pharmacy plan designs in the context of evolving healthcare trends and budget constraints. Ultimately, the projected cost analysis presented in this research project aims to provide a comprehensive evaluation of the financial implications of various Medicare pharmacy benefit options, with the goal of supporting evidence-based decision-making and promoting the long-term sustainability of the Medicare program.

Thesis Overview

What is the cost of providing a prescription drug benefit plan for Medicare enrollees? The following research report: Projected Cost Analysis of Potential Medicare Pharmacy Plan Designs, sponsored by the Society of Actuaries Health Section and Health Practice Area, explores this important and pressing issue that has been the subject of recent front page headlines. The study, which was conducted by Reden and Anders, estimates and compares the current costs of providing prescription drug coverage for approximately 30 representative benefit plans. Further, for two of the plans, the study forecasts these costs over the next 10 years. Of equal importance, the study points out the myriad of factors that can impact these costs now and in the future to better inform readers comparing proposals currently under consideration by Congress.