Medicare program saves lives.

                Comments due by Mar. 1 , 2015

So what do you think is the expenditure by the Medicare program justified?

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The Medicare prescription-drug benefit introduced in 2006 saved an estimated 19,000 to 27,000 lives in its first year by expanding access to medications that treat cardiovascular killers like strokes and heart disease, according to new research from the Federal Reserve Bank of San Francisco.

“While the exact magnitude of the number of lives saved depends on the particular specification, the basic result of a decline in cardiovascular-related deaths is shown to hold up across a multitude of robustness tests,” economists Abe Dunn and Adam Hale Shapiro wrote this month in a working paper, “Does Medicare Part D Save Lives?”

The Part D benefit, enacted by Congress in 2003 and introduced in 2006, subsidized drug coverage for elderly and disabled Americans through the Medicare program.

A guide to the new Medicare drug prescription program in November 2005.

Getty Images

To evaluate its effects, Mr. Dunn, of the Commerce Department’s Bureau of Economic Analysis, and Mr. Shapiro, a senior economist at the San Francisco Fed, analyzed data from the Centers for Medicare & Medicaid Services and the Centers for Disease Control and Prevention.

The benefit was introduced at the beginning of 2006, so the economists zoomed in on mid-2006 to mid-2007 “as the initial 12 months that Part D would have an impact on mortality,” they wrote. They used geographic differences in pre-2006 drug coverage to separate out the effects of the new benefit in terms of encouraging people to obtain medication. And they looked specifically at cardiovascular diseases like heart attacks and strokes, since they can be effectively and quickly treated with drugs that target high cholesterol, high blood pressure and blood clots.

They found that cardiovascular-related deaths declined, especially “in those counties that had a high share of individuals without drug coverage prior to the reform,” Messrs. Dunn and Shapiro wrote. That finding, they wrote, “offers strong evidence that Part D led to a sharp reduction in cardiovascular-related deaths, and the observation that we find no effect on noncardiovascular deaths bolsters this evidence.” Other analysis also supported that conclusion, they wrote.

“Estimates suggest that between 19,000 and 27,000 more individuals were alive in mid-2007 because of the Part D implementation in mid-2006,” they wrote.
Assuming a year of life is worth $200,000, they added, “we find that the additional value of life-years gained is between $3.9 billion and $5.4 billion, which greatly exceeds the additional out-of-pocket costs for cardiovascular-related drugs of approximately $870 million. In fact, the total benefit exceeds the total estimated additional spending on cardiovascular drugs from the program of $3.8 billion.”

 (WSJ Blog)