Policy Documents

Medicare Part D Proves That Competition Lowers Health Care Spending

Drew Gonshorowski –
June 6, 2012

In this post in the Foundry, the author contends that some policymakers have difficulty understanding competition’s role in health care. There is an historical reason: With a legacy of third-party micromanagement, something like Medicare Part D—a program where about 1,100 drug plans compete for enrollees—is remarkably foreign. Several analysts cite this program as a marked success for competition in health care. However, a recent Kaiser Family Foundation issue brief claimed that the effect of competition was overstated and unclear.

Interestingly, the arguments intended to downplay the role of competition actually provide evidence that Medicare Part D competition is working.