Assessing the impact of coverage gaps in the Medicare Part D drug benefit

The new Medicare Part D drug benefit contains major coverage gaps for people who spend moderate to high amounts on prescription drugs who qualify only for the standard coverage. To help policymakers understand the impact such gaps will have on those affected, we studied a representative sample of Medicare beneficiaries with naturally occurring prescription benefit gaps between 1998 and 2000 using data from the Medicare Current Beneficiary Survey. Our findings suggest that discontinuities in drug benefits result in sizable reductions in medication use and spending, which is magnified in people with common chronic illnesses.