Cap Medicare out-of-pocket drug costs
A bipartisan group of House lawmakers recently unveiled a bill that would cap Medicare beneficiaries’ out-of-pocket drug costs.
It’s hard to imagine anyone not thinking that’s a great idea.
Insanely high out-of-pocket costs can prevent many Medicare patients from getting the medicines they need. Limiting the cost would not only keep folks healthier, it would allow them a little more money to spend elsewhere.
Individuals would benefit greatly from such a measure, but our nation’s health system could reap benefits as well.
Medicare’s “Part D” drug benefit is different from other entitlement programs. Rather than administer benefits directly, the government subsidizes Part D plans sold by private insurers. Insurers are largely free to design Part D plans as they see fit, as long as the plans meet certain requirements. Insurers compete for beneficiaries’ business by offering a variety of plans with different premiums and cost-sharing structures.
Part D’s unique, market-based structure has successfully contained costs for both the program and its beneficiaries. In its first decade, Part D cost about $350 billion less than originally projected. Part D premiums have also remained stable, and are about half of initial estimates.
Thanks to Part D, more than 40 million elderly patients now have access to reasonably priced medications. One study found that Part D has saved more than 22,000 lives annually since it was first enacted.
The program is far from perfect. It leaves a small minority of patients on the hook for huge pharmacy bills. About 2 percent of all Part D enrollees have to spend more than $5,000 in out-of-pocket each year.
Excessive out-of-pocket costs are more than a financial burden. When patients can’t afford their prescriptions, they start skipping doses or stop taking their medicines altogether. This “prescription non-adherence” can lead to serious illness and avoidable death.
The new bill, released by members of the House Ways and Means and Energy and Commerce Committees, would fix this problem. It’d eliminate all co-pays and co-insurance after beneficiaries spend $5,100 out-of-pocket.
By helping patients afford their drugs, this bill would increase medication adherence and save our health system money in the long run. When patients stick to their drug regimens, they’re less likely to require expensive hospitalizations down the line.
Capping out-of-pocket costs in Medicare Part D is a simple way to improve Medicare beneficiaries’ health and save taxpayers’ money. Congress and the president should leap at the chance to bring some much-needed relief to America’s most vulnerable patients.
Sandip Shah is founder and president of Market Access Solutions, which develops strategies to optimize patient access to life-changing therapies.