OBJECTIVES: To examine, using nationally representative data, the impact of Medicare Part D on out-of-pocket-costs, emergency room visits, hospitalization, and general health among civilian non-institutionalized Medicare beneficiaries. METHODS: The primary data were from the Medical Expenditure Panel Survey (MEPS) panel 10 data, which included Medicare beneficiaries aged 65 and older in 2005.  Near elderly respondents in MEPS (aged 55 to 63 years old) in 2005 served as control subjects. Raw and adjusted difference-in-differences were used to identify the effects of Medicare Part D on Medicare beneficiaries in terms of out-of-pocket costs, emergency room visits, hospitalization, and general health according to a preference-based summary score (SF-12 based utility scores). RESULTS: Controlling for secular trends, Medicare Part D prescription drug benefit resulted in a 22% (95% CI: 7% - 37%) reduction in out-of-pocket costs among Medicare beneficiaries (p=0.0020). However, the Medicare Part D benefit did not significantly impact emergency room visits (OR=1.15, 95%CI: 0.59 - 1.71), hospitalization (OR=1.64, 95% CI: 0.68 – 2.60), or overall health (β=-0.0057, 95% CI: -0.0210 – 0.0096) among Medicare beneficiaries compared to controls. CONCLUSIONS: In the first year following the implementation of Medicare Part D, out-of-pocket costs for prescription drugs were reduced among Medicare beneficiaries. However, Medicare Part D was not associated with improved health outcomes of Medicare beneficiaries as measured by reductions in emergency room visits and hospitalization and improvement in their health utility score. Further research should follow Medicare beneficiaries for a longer period of time after its implementation or focus on beneficiaries with diseases that might be more sensitive to Medicare Part D.