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The Medicare Modernization Act of 2003 added a new outpatient pre-scription drug bene\u85t to Medicare and increased payments to private plans to induce more plan participation in the Medicare market. We develop a theoretical model to clarify the bene\u85ts to bene\u85ciaries of these two expansion paths and then estimate a statistical model of plan choice that enables us to quantify these bene\u85ts. We \u85nd that the expansion of drug bene ts produced \u85ve times as much value per government dollar as the expansion of plan choices. We estimate that approximately $43 billion will be spent over the next ten years to expand choices with little value to bene ciaries. We suggest that modi\u85ed bidding procedures could reduce this spending.