Inflation Reduction Act Undermines Medicare Drug Benefits

In the recent Forbes Magazine article titled: Biden's In Inflation Reduction Act Unravels Medicare Part D, the point is made that while the act may reduce inflation in parts of the US economy, it appears that it will also raise costs for seniors in the Part D program.
 
​The Inflation Reduction Act (IRA) of 2022, touted by Democrats as a means to lower Medicare costs for seniors, is having unintended consequences on Medicare Part D coverage. The Act authorized drug pricing "negotiations" and introduced measures like a $2,000 cap on annual out-of-pocket prescription costs and a 6% limit on yearly Part D premium increases.

However, the reality is that seniors themselves are bearing the cost of these supposed savings through hidden premium increases. The IRA's interventions are making the Part D drug benefit less attractive for insurers, leading to a significant reduction in plan options. Since 2006, the number of available plans has dropped by over 50%, with an 11% decrease in the past year alone.

Moreover, the remaining plans have become considerably more expensive. The average standalone Part D plan now costs $48 per month, a 21% increase from the previous year, with steeper increases projected for 2025. The new guidance is expected to exacerbate these trends, potentially leading to more restrictive measures like prior authorization or step therapy requirements.

The core issue lies in the IRA's focus on saving government money rather than benefiting seniors directly. While some provisions do save money for certain seniors, they shift costs onto insurers. The Medicare premium increase cap, advertised as 6%, applies only to one calculation used in setting monthly premiums, allowing actual costs to rise by 20-40% while still complying with the cap.

Furthermore, the price controls implemented by the IRA may deter generic competitors from entering the market when drugs go off-patent. The new guidance also indicates that Medicare officials will continue setting drug prices with minimal input from physicians and without a process to monitor the impact on medicine availability for seniors.

In essence, the Inflation Reduction Act, contrary to its promises, is leading to higher premiums, fewer choices, increased government control, and a situation where patients and doctors are left to navigate the consequences. While officials may overlook these issues, the Act appears to be undermining the Medicare drug benefit it was meant to improve.

Contact Ted Czabanowski if you have any questions about .your current Medicare plan.