Despite premium changes, most Medicare patients who hit the new $2,000 out-of-pocket limit on prescription drugs will still see significant savings, according to one agency. Report AARP released Thursday.
Research results show hat This could be a huge benefit for older adults who struggle to afford expensive medications for cancer, rheumatoid arthritis and other serious illnesses. These seniors and other U.S. patients pay two to three times more for prescription drugs than people in other developed countries.
The restriction came into effect earlier this year. It’s one of the most important provisions in President Joe Biden’s 2022 inflation-cutting bill, which aims to reduce high drug costs, in addition to setting limits on every level of negotiations with manufacturers on insulin and Medicare drug prices. New cap of $35 per month.
The report found that of the more than 1 million Medicare Part D enrollees expected to reach the new cap in 2025, 94 percent will see their out-of-pocket costs, including premiums and cost-sharing, reduced, with an average savings of $2,474. The report, which analyzed information such as plan enrollment and premium data, showed total out-of-pocket expenses fell by an average of 48%.
This 1 million population does not include beneficiaries receiving certain medical insurance low income subsidy and those among employers exemption program.
The report said that by 2025, 62% of these 1 million enrollees are expected to save an average of more than $1,000, while 12% will save more than $5,000. The remaining 6% of Part D participants who are expected to reach the new cap are expected to have higher out-of-pocket costs, with an average additional expenditure of $268 in 2025, the report said.
Notably, the share of Part D enrollees with lower total out-of-pocket costs who reach the cap in 2025 is expected to be 95% or higher in 33 states and Washington, D.C.
“When you’re able to provide these types of savings, it frees up those funds for other really important things that (patients) might have to make trade-offs on, like paying for food or paying rent,” said Leigh Purvis. “Cost,” the head of prescription drug policy at the American Association of Retired Persons said in an interview. “This is a very meaningful impact, especially for people on fixed incomes.”
She added that the median annual income for Medicare beneficiaries is about $36,000.
AARP said these savings were achieved despite changes to Part D premiums in 2025. Purvis said the new prices for the top 10 drugs chosen for Medicare negotiations and the expected lower costs won’t take effect until 2026, resulting in premium increases in some cases.
Critics have tried to blame the law for rising premiums and rising overall costs for Medicare enrollees, she said. But for most patients who hit the $2,000 cap, lower out-of-pocket costs will more than offset higher premiums, the report said.
With the first round of new negotiated prices for drugs set to take effect in 2026, the positive impact “will only get bigger,” the report said.
“Medicare is going to save a lot of money, so it’s really a much bigger story than it seems because those savings go to a lot of different people in a lot of different ways,” Purvis said.
a separate AARP report The study found that by 2025, an estimated 3.2 million Medicare beneficiaries will save money from the out-of-pocket cap.
According to statistics, Medicare covers approximately 66 million people in the United States, with 50.5 million patients enrolled in Part D plans 2023 data From the health policy research organization KFF.
The new price cap applies to all prescription drugs under Medicare Part D, but does not include drugs given to patients in hospitals or other medical settings, such as anesthesia and chemotherapy.
Before the change, people with Medicare typically had to pay $7,000 or more out of pocket for prescription drugs before qualifying for so-called “catastrophic coverage,” in which coverage kicks in and covers most of the drug costs.
Under this coverage, patients pay a small deductible or a percentage of the drug cost, usually 5%.
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