How Big Is the Government Subsidy for Medicare Part D?

IB#19-20

The brief’s key findings are:

  • Medicare Part D provides access to prescription drug coverage for seniors and reduces their cost burden by subsidizing premiums and contributing to cost-sharing.
  • The question is, how large is the lifetime subsidy for a typical 65-year-old?
  • The analysis estimates a lifetime subsidy of about $20,000 to $60,000 per person, depending on life expectancy, interest rates, and expected drug spending.
  • This amount is large relative to the retirement saving of retirees, underscoring Part D’s substantial impact on the well-being of older Americans.