This study examines the effect of the Medicare Prescription Drug Benefit (Part D) on other Medicare spending.  The study concludes that, for people who previously had little or no prescription coverage, savings on other medical care approximately offset the costs of extending prescription coverage to Medicare enrollees.  However, the study also found that medical spending increased in the group with the most generous prescription coverage.

Zhang, Y., et al. (2009). The effect of Medicare Part D on drug and medical spending. The New England Journal of Medicine, 361:1, 52-61.

Authors: Yuting Zhang, Julie M. Donohue, Judith R. Lave, Gerald O'Donnell, and Joseph P. Newhouse