Assessing the Design of the Low-Income Subsidy Program in Medicare Part D: Working Paper 2014-07

By Andrew Stocking (CBO), James Baumgardner (CBO), Melinda Buntin (Vanderbilt University), and Anna Cook (CBO) The structure of the Medicare Part D prescription drug program generally encourages plan sponsors to submit low bids. However, rules in the program relating to low-income beneficiaries generate a different set of incentives for plans seeking to serve those beneficiaries. We find that over the first five years of the Part D program, two types of plans emerged—those that catered primarily to beneficiaries receiving low-income subsidies (LIS plans) and those that catered primarily