Most Medicare patients who hit a new $2,000 cap on out-of-pocket prescription drug out-of-pocket costs could see significant savings despite the change in premiums, according to a report released Thursday by AARP. There is.
The study results show that this cap could be a major benefit for older people on Medicare who struggle to afford expensive treatments for cancer, rheumatoid arthritis, and other serious illnesses. Suggests. These seniors and other U.S. patients pay two to three times more for prescription drugs than people in other developed countries.
The restrictions went into effect earlier this year. This is one of the most important provisions of President Joe Biden’s Inflation Control Act of 2022, which, along with a new $35 per month cap on insulin and negotiating Medicare drug prices with manufacturers, aims to reduce high drug costs. It is said that
Of the more than 1 million enrollees in Medicare Part D, which is expected to reach the new cap in 2025, 94% will see their out-of-pocket costs, including premiums and cost-sharing, decrease, according to the report. , you can save an average of $2,474. That translates to an average 48% reduction in total out-of-pocket costs, according to the report, which analyzed data such as plan enrollment and premiums.
This 1 million figure excludes Medicare beneficiaries who receive certain low-income subsidies and those enrolled in employer-based waiver plans.
The report estimates that 62% of the 1 million subscribers will save an average of $1,000 or more in 2025, and 12% will save more than $5,000. The remaining 6% of Part D enrollees who are expected to reach the new cap will have higher out-of-pocket costs and will spend an average of $268 more in 2025, according to the report.
Specifically, the proportion of Part D enrollees whose total out-of-pocket costs are expected to reach the cap and decrease in 2025 is estimated to be 95% or higher in 33 states and Washington, DC.
“When you have those types of savings, you can use those funds to do other really important things, like paying for food and rent, that maybe (patients) have had to make sacrifices,” says Lee Purvis. he says. said AARP’s director of prescription drug policy in an interview. “This is a very meaningful impact, especially for people on fixed incomes.”
She added that the median income for Medicare beneficiaries is about $36,000 a year.
These savings come despite changes to Part D premiums in 2025, according to AARP. Purvis said the new prices for the first 10 drugs selected in Medicare negotiations, and the expected lower costs from them, won’t take effect until 2026, causing premiums to rise in some cases. Ta.
He said critics are trying to blame the law for higher premiums and increased costs for Medicare enrollees overall. But the report says lower out-of-pocket costs for most patients who hit the $2,000 limit will more than offset the higher premiums.
The report says the positive impact will be “even greater” as new negotiated prices for the first batch of new drugs come into effect in 2026.
“This is actually a much bigger story than it seems, just because the Medicare program is going to save a lot of money, and that savings will be passed on to different people in different ways,” Purvis said. he said.
According to another AARP report, 3.2 million Medicare beneficiaries are expected to see savings from out-of-pocket caps in 2025, and that number is expected to rise to 4.1 million by 2029. has been.
Medicare covers about 66 million people in the U.S., and 50.5 million patients are enrolled in Part D plans, according to 2023 data from KFF, a health care policy research institute.
The new price cap applies to all prescription drugs under Medicare Part D, but does not include drugs administered to patients in hospitals or other medical settings, such as anesthesia or chemotherapy.
Before the change, people on Medicare had to pay more than $7,000 out-of-pocket for prescription drugs before they could qualify for so-called “catastrophic coverage,” where insurance would cover most drug costs. It was common.
Under this insurance, patients are charged a small co-payment, or a percentage of the drug cost (usually 5%).
