Medical care in America has become very expensive and various measures are being taken to cut costs. One of the methods, according to a recent study, that can help in saving close to $12 billion is the five-year prescription drug plan. According to the research taken up by Harvard, this plan reduces the requirement for senior citizens to make frequent hospital visits and keeps them away from nursing homes. In the process, a considerable amount of money can be saved.

The government of United States spends close to $55 billion on Medicare Part D every year. The savings provided by the five year plan is a significant part of the entire Medicare budget. The drug plan is better known in technical circles as Medicare Part D plan. The study has proved that the Plan D is very effective not only in saving money but also in keeping senior citizens fitter, healthier and happier.

The report was published in the latest edition of Journal of the American Medical Association. It was found that those senior citizens whose drug coverage was insufficient before Medicare Plan D was implemented could now save up to $1200 for duration of one year. Experts say that a major portion of savings in Medicare plans happens from nursing homes and hospitalization costs. Annually, all expenses cumulate to $12 billion.

According to the research, if senior citizens can purchase drugs that can save them hospital trips at subsidized costs, then the cost of medical care declines considerably, Dr. Michael McWilliams from the Harvard Medical School said in the report.

Apart from the costs saved in hospitalization, doctors are the best sources of saving, according to the report. Doctors who do not take inpatients just for the sake of cheap medical benefits that the plan provides save a lot of money. According to Dr. McWilliams, Medicare pays for drug treatments when a patient can effectively be treated in the doctor’s office without having the need to hospitalize

Part D of Medicare plan is a voluntary program. As per this plan, people who sign up have to put up 25% of the costs in the form of premiums, which can be paid every month. In 2010, the total number of people to have benefited from the Plan D of Medicare was twenty three million.

In order to come to the above mentioned conclusions, the team of researchers undertaking the study took into consideration six thousand elderly for a period ranging between 2004 and 2007. It was only in 2006 that Plan D was put into motion.