If you are a senior on Medicare or close in age to receive Medicare, perhaps a strong consideration this election in your decision-making process is to look at the passage of the Inflation Reduction Act (IRA) in 2022, specific to the provisions on prescription drugs. Remember that all Democrats in the Senate and House voted for the IRA’s passage, while all Republicans voted against it.
Stroll down memory lane to 2022, big drug companies lobbied fiercely against the major drug changes that Democrats proposed. Democrats in 2020 made lowering the cost of prescription drugs one of their main platforms and they delivered on that promise.
It was the first time ever that the powerful big pharma lobbies were defeated. Republican lawmakers, on the other hand, sided with big pharma even as some were claiming to support reducing drug costs.
Major Changes to Medicare since the passage of the IRA
What were some of the major changes in the 2022 IRA related to drug costs?
*In 2023, a $35 cap per month on out-of-pocket costs for insulin products for all Medicare beneficiaries was implemented. One government estimate for out-of-pocket insulin costs found that people with diabetes enrolled in Medicare or private insurance paid an average of $452 a year prior to the IRA, according to a December 2022 report by the U.S. Department of Health and Human Services. Uninsured users, however, paid more than twice as much on average for the drug, or about $996 annually. Some estimates show much higher pre-IRA insulin spending per year.
*Beginning in 2023 for the first time ever, Medicare had the power to negotiate drug prices. This is what Medicare and senior’s advocacy groups like AARP for decades have been fighting for and it finally became a reality. In 2023, the first 10 costly prescription medications were lowered to what’s called their “maximum fair prices” (MFP). These outpatient medications are popular, top-selling drugs, used to treat conditions such as heart disease, diabetes and cancer.
Experts say Medicare beneficiaries are expected to save in aggregate of $1.5 billion in out-of-pocket costs on pharmaceuticals in just this first round of drugs. These drug prices are expected to go into effect in January 2026, and the Medicare drug negotiations program will continue. In February 2025, an additional 15 outpatient medicines will be selected, and their MFP will be applied in 2027. This same pattern will be repeated as long as Medicare reserves this right to negotiate drug prices.
*Beginning in 2025, Medicare will undergo another major change. For the first time Medicare will place an annual out-of-pocket cap of $2,000 on their drug plans. Prior to this, there was no cap and some seniors with chronic illnesses were paying well over $10,000 each year just to survive. AARP estimates over three million Medicare enrollees stand to benefit.
Cost and health
It cannot be overstated how important these cost-savings measures are for seniors. AARP surveys show how the high cost of medications for seniors often has a direct impact on health. Many report skipping the recommended frequency of taking medicines or cutting pills in halves to extend their batch until the next refill. Doctors talk about the dangers of this that can have life-and-death consequences. But still, many chronically ill patients will follow these practices because of the high cost of medicines.
Medicare on right track, but could do more
Medicare is on the right track with all these cost-savings changes on medicines. It is also on the right track in the rollout of added and expanded services and new customer protections.
There are over 50 million Medicare enrollees. Many of them are not on costly prescription drugs and their top concern instead is the high cost of premiums, specifically Medicare Part B for doctor outpatient visitation which will once again go up in 2025. This is an area where cost-savings would benefit most Medicare enrollees and deserves more cost-savings attention.
Political talk versus real action
Medicare remains among the most popular government programs available supported by a majority of Americans.
*In fact, 83% of voters support expanding Medicare to cover hearing, vision and dental care.
*A Reuters-Ipsos poll show 70% of Americans support a Medicare for All system.
*A KFF poll has 68% of Americans favoring a government-administered public option. These findings show broad and bipartisan support. But all of them have been mostly rejected by Republicans.
Politicians will all talk about being defenders of Medicare and vow to support it. However, Americans must look at politicians’ voting record. Look at the IRA vote and who did not support the provisions to reduce drug costs for Medicare. Again, zero Republicans voted for the passage of the IRA.
Certainly, there are many issues to weigh in this election – inflation, the economy, immigration, to name a few. But if health and the cost of healthcare is high up on your priorities as a voter, there clearly is one political party that’s pushing for policy to back up their talk, while the other side is just blowing hot air.
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