Explaining Medicare Part D's Success As A Byproduct Of Flat Voucher Subsidies

When the Medicare outpatient prescription drug benefit - Part D - was enacted in 2006, Medicare was prohibited from negotiating prescription drug prices. Rather, price negotiations were left in the hands of private entities, such as prescription drug plans and Medicare Advantage insurers.

In spite of this, for years, many politicians and policymakers have argued that Medicare should be able to negotiate prescription drug prices on behalf of all beneficiaries. This, they maintain, would lower prescription drug prices, given the leverage and market power Medicare would exert.