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Abstract

Since Medicare was established in 1965 to provide insurance for the elderly and handicapped, the benefits offered by Medicare have scarcely changed except for a few added preventive services. Sustained growth in Medicare expenditures and the aging of the “baby boom" generation are placing growing strains on Medicare's financial sustainability. Under current practices, the Center for Medicare and Medicaid Trustees estimate that the Part A Hospital Insurance Trust Fund will only remain solvent until the year 2018. On January 1, 2006, Medicare's new Plan D prescription-drug coverage plan was launched. Critics have charged that unlike existing government health plans, Part D does not allow Medicare to directly negotiate drug prices with pharmaceutical companies. As a result, these companies may be charging taxpayers up to 80% more for drugs purchased under Part D than for those purchased under other plans. With Medicare's financial sustainability in question, Medicare infrastructure such as the Part D policy must be adapted in order for Medicare to continue providing quality health services to the elderly.

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