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CBO Analyzes New Research Demonstrating Effects of Prescription Drug Use on Medicare’s Spending for Medical Services

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When studying the possibility of an “offsetting effect” that prescription drug use would have on spending for medical services, the Congressional Budget Office (CBO) previously did not find sufficient evidence to indicate that such a relationship existed. Thus, an “offsetting effect” was not taken into consideration when estimating spending in the Medicare Modernization Act of 2003 and the Affordable Care Act. However, after reviewing recent studies, the CBO now estimates that a 1 percent increase in the number of prescriptions filled by beneficiaries would cause Medicare’s spending on medical services to fall by approximately 0.2 percent. This relationship will be incorporated in future budgetary estimations.



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