New Federal Budget Bill Blasts Medicare Part D

  • by: Peter Pitts |
  • 02/08/2018
The latest federal funding bill could issue a huge blow to beneficiaries of Medicare Part D, the government program that subsidizes the cost of prescription drugs for 42 million seniors.
The bill restructures how costs are divided between beneficiaries, insurers, and drug manufacturers once Medicare recipients' prescription costs hit a predetermined limit -- or what's known as the "donut hole." It's a terrible change, and it stands to raise costs for seniors, particularly those whose drug expenses already are through the roof.
Medicare Part D provides seniors with access to affordable prescription drug coverage offered by private insurers. There are more than 780 unique Part D plans available in the country, but each requires patients to follow the same payment plan.
First, patients must pay for their own medications until they meet a deductible -- $405 in 2018. Then, insurance kicks in and patients pay about 25 percent of their drug costs.
After patient's total drug spending hits $3,750, they enter the "donut hole," where they're responsible for 40 percent of brand-name drug costs.
Congress gets that the donut hole burdens patients. So they're trying to phase it out. Under current law, patients' cost-sharing would drop to 25 percent by 2020. Insurers would chip in the same percentage and manufacturers would cover the leftover 50 percent.
Now, Congress wants to shift the insurers' costs to drug makers. The new proposal would force manufacturers to front 75 percent of the cost of brand-name prescriptions in 2020, reducing insurers' cost-sharing to zero.
That change doesn't explicitly affect the percentage fronted by patients. But it will still affect the amount they pay for medications.
With their cost-sharing down to zero, insurers will have no reason to keep patients' drug costs low. Instead, they'll have an incentive to increase it -- and they'll put patients on the fast-track to the donut hole.
Proponents of the proposal say that it will save Medicare billions of dollars annually. But Part D already is economical. Its costs are 45 percent lower -- $349 billion less -- than initially projected for its first decade. And seniors like how Part D works. Nine in 10 report that they're satisfied with the program.
Part D is one of the highest-functioning branches of healthcare. Its performance and the care it secures for America's seniors should not be jeopardized because insurance companies want to shift some costs to drug makers.

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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