Medicare Prescription Drug Improvement and Modernization Act

Medicare Prescription Drug, Improvement, and Modernization Act of 2003, was created to modern Medicare system, and provide seniors with prescription drug benefits and more choices in health care.

Medicare part D

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (generally referred to as the Medicare Modernization Act, or MMA) substantially expanded the federal Medicare program by creating the prescription drug benefit known as Part D. The MMA provides for a number of new Medicare benefits, most notably prescription drug coverage. The MMA also creates new benefits for preventative care and establishes subsidies for companies that maintain retiree health insurance plans with drug coverage that is actuarially equivalent to the new Medicare drug benefit.

Competitive design

Most beneficiaries of Part D choose among private drug plans to receive their coverage; others have employment-based coverage subsidized by Medicare Part D. The competitive design of Part D enables it to adapt flexibly to changing conditions, because plan sponsors (private insurance firms, each of which may offer several different plans) have ongoing incentives to develop new ways to control drug spending so as to minimize their costs, keep premiums low, and attract enrollees.

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