Medicare enrollees can purchase prescription drug coverage through the Medicare Part D program. Prior to passage of the Affordable Care Act (ACA), the coinsurance structure of Medicare Part D was as follows: There was an initial $295 out of pocket deductible before insurance began to pay anything Between $295 and $2,700 in total costs ($970 out of pocket), the coinsurance rate was 25% After $2,700 in total costs, the coinsurance rate increased to 100% Once total costs reached $6,153 ($4,350 out of pocket), the coinsurance rate fell to 5%

a) Use the specifics of the Medicare Part D prescription drug plan and graph a senior's out of pocket expenses for prescription drugs (vertical axis) versus the total expenditures on prescription drugs (horizontal axis). b) Does the structure of this cost sharing arrangements make sense from an economic point of view? Why or why not? c) Draw the same graph using the changes to Medicare Part D implemented under the ACA. How do you expect that this change will affect spending on prescription drugs by the elderly?