A first look at the new Medicare prescription drug plans.

Medicare began offering an outpatient prescription drug benefit through private plans in January 2006. Using nationwide data, we examine the availability, costs, and benefits of regional and local plans offering these benefits to beneficiaries. Because they are an entirely new concept for Medicare, we focus on stand-alone prescription drug plans, comparing them with other Medicare health plans offering drug coverage. The infamous "doughnut hole" exists for all but a few of these plans. One national stand-alone drug plan, though, covers brand-name drugs with no gap. Variations in cost sharing and formularies provide beneficiaries with choices as well as complexity.