The costs of a Medicare prescription drug benefit

This paper describes a preliminary cost estimate, prepared by the Congressi onal Budget Office (CBO), of President Clinton's 1999 prescription drug ben efit proposal. The CBO estimated that the new benefit would increase net Me dicare outlays by $136 billion between 2002 and 2009, although these estima tes are highly uncertain. Because the proposal included an annual cap on th e amount of the benefit, it did not require consideration of an important e ffect of a more comprehensive benefit: higher prices for some drugs. Estima tes of future proposals for a Medicare prescription drug benefit may requir e consideration of that pricing effect.