When Pam McClure learned she could save nearly $4,000 on prescription drugs next year, “it sounded too good to be true,” she said. She and her husband are retired and living on a “very tight” budget in central North Dakota.
By the end of this year, she will have spent about $6,000 on medication, including drugs to control her diabetes.
According to Avarere/AARP research, McClure, 70, has Medicare prescription drug insurance that will limit out-of-pocket medical expenses to $2,000 in 2025 under the Biden administration's 2022 Inflation Control Act. He is one of about 3.2 million people in Japan.
“It's great, oh my god, we'll actually be able to live,” McClure says. “We might be able to buy fresh fruit in winter.''
The Climate and Health Care Act, the Reducing Inflation Act, fundamentally redesigned the Medicare drug benefit known as Part D, which serves about 53 million people over 65 or with disabilities. The government estimates that about 18.7 million people will save about $7.4 billion next year through out-of-pocket caps and less publicized changes.
The annual enrollment period for Medicare beneficiaries to renew or switch drug coverage or select a Medicare Advantage plan ends on December 7th.
Medicare Advantage is a commercial alternative to traditional government-run Medicare that covers medical care and often prescription drugs. Medicare stand-alone drug plans, which cover drugs typically taken at home, are also administered by private insurance companies.
“We always encourage beneficiaries to look at their plans and choose the option that's best for them,” said Chiquita Brooks LaSure, director of the Centers for Medicare and Medicaid Services. “And it’s important that we do that, especially this year because the benefits have changed so much.”
The new law requires improvements to Medicare drug coverage, the most sweeping changes since Congress added the benefit in 2003, but most voters don't know about it, KFF research shows. It turned out that. Some beneficiaries may also be surprised by the downside of increased premiums for some plans.
According to CMS, average premiums for Medicare drug plans nationwide are expected to drop by about $1.63 per month, or about 4%. “People enrolled in Medicare Part D plans continue to receive stable premiums and have a wide selection of affordable Part D plans,” the agency said.
However, an analysis by health information nonprofit KFF, which includes KFF Health News, found that “many insurers are raising premiums,” and major insurers such as United Healthcare and Aetna are also reducing the number of plans they offer. It turned out that it was.
Many Part D insurers' original 2025 premium proposals were even higher. To cushion price shocks, the Biden administration created what it calls a demonstration program that would pay insurers an additional $15 per beneficiary per month if they agree to limit premium increases to $35 or less. .
“Without this demonstration, premium increases would undoubtedly have been much larger,” Juliette Cubansky, associate director of KFF's Medicare policy program, said in an Oct. 3 analysis.
Nearly all Part D insurance companies agreed to this arrangement. In California, for example, Wellcare's popular Value Script plan has gone from 40 cents a month to $17.40 a month. New York's Value Script plan went from $3.70 to $38.70 per month, an increase of more than 10x. It was a $35 increase to be exact.
A KFF Health News study found that at least 70% of drug plans offered in California, Texas and New York saw premiums increase, and about half of plans in Florida and Pennsylvania, the five states with the largest number of Medicare beneficiaries. .
In addition to the $2,000 drug spending limit, the Inflation Reduction Act would limit Medicare copayments for most insulin products to no more than $35 per month and allow Medicare to set prices for some of the most expensive drugs directly with drug companies. I agree to negotiate.
It would also eliminate one of the most frustrating features of drug benefits, the gap known as the “donut hole.” This gap causes people to face higher drug costs and at the same time suspend coverage, forcing people to pay out-of-pocket for their plans' full drug costs until insurance benefits expire. They reach spending thresholds that vary from year to year.
The legislation also expands eligibility for “special needs” subsidies for about 17 million low-income people in Medicare drug plans and increases the amount of the subsidies. Pharmaceutical companies will need to pitch in to pay for it.
From January 1, the redesigned drug benefit will operate like any other private insurance policy. Coverage begins after the patient pays their deductible, and next year's deductible will be no more than $590. Some plans have low deductibles, zero deductibles, or exclude certain drugs (usually cheaper generic drugs) from their deductibles.
After a beneficiary spends $2,000 on deductibles and copays, the remaining Part D drugs will be free.
That's because the new law will increase the proportion of the bill that insurance companies and drug companies receive. The law also seeks to limit future drug price increases by limiting increases in consumer price inflation, which was 3.4% in 2023. If prices rise faster than inflation, drug companies must pay Medicare the difference.
“Before the redesign, Part D encouraged drug price increases,” says Gina Upchurch, a pharmacist and executive director of Senior Farm Assist, a nonprofit organization in Durham, North Carolina, that counsels Medicare beneficiaries. he says. “Current design methods place more financial obligations on plans and manufacturers, putting pressure on them to help control prices.”
Another provision of the law allows beneficiaries to pay for drugs in installments instead of paying large bills over a short period of time. The insurance company is supposed to do the calculations and send the policyholder a monthly bill, and the bill will be adjusted if drugs are added or removed.
