Part D party! The Biden administration boosts a boast

Note: All xpostfactoid subscriptions are now through Substack alone (still free), though I will continue to cross-post on this site. If you're not subscribed, please visit xpostfactoid on Substack and sign up! 

"The IRA saved me $103 in Part D OOP!"

The Biden administration is rightly broadcasting the out-of-pocket savings that the Inflation Reduction Act will yield to enrollees in Medicare Part D prescription drug plans. That said, the headline claim in the White House fact sheet turned my head:

New data shows nearly 19 million seniors and other Medicare beneficiaries will save an estimated $400 per year in prescription drug costs because of President Biden’s out-of-pocket spending cap

Thanks to President Biden’s Inflation Reduction Act, out-of-pocket spending on prescription drugs at the pharmacy will be capped at $2,000 per year for Medicare Part D enrollees starting in 2025.  Today, the Department of Health and Human Services (HHS) released data showing that 18.7 million (or 1 in 3) seniors and people with disabilities who are enrolled in Part D plans will save, on average, $400 per year when the $2,000 cap and other Inflation Reduction Act provisions go into effect in 2025. And some enrollees will save even more: 1.9 million enrollees with the highest drug costs will save an average of $2,500 per year starting in 2025. Overall, the law’s Part D benefits provisions will reduce enrollee out-of-pocket spending by about $7.4 billion annually.

Is there a pithy way to say that averages smooth out a lot of variation? Savings from the IRA’s changes to Part D are (appropriately) weighted toward a few million enrollees with really heavy out-of-pocket exposure.

Democrats have twelve years of healthcare accomplishment to run on

Subscribe (free) to xpostfactoid

Chuck Schumer tours Adirondack Medical Center

HuffPost reports that Priorities USA is urging Democrats to tout recent healthcare achievements:

In a memo set to be published Wednesday, Priorities USA says the most popular achievements of President Joe Biden’s tenure are giving Medicare the power to negotiate prescription drug prices, capping the price of insulin and continuing expanded subsidies for the Affordable Care Act.

Priorities USA recommends focusing on these issues while also attacking Republicans for working to restrict abortion rights in the wake of the Supreme Court decision overturning Roe v. Wade.

Amen. And below those top lines -- the healthcare provisions in the Inflation Reduction Act passed this month -- Democrats should also tout a long tail of recent accomplishments that have improved healthcare affordability and access. Their claim to be the party of healthcare bears not only recent but cumulative weight.

Healthcare was a potent issue for Democrats in 2018, with Republicans fresh off their failed attempt to repeal the ACA's core programs in 2017.  Because they failed, the ACA Medicaid expansion and subsidized marketplace survived to catch the newly uninsured when more than 20 million Americans lost their jobs in the first onslaught of the COVID-19 pandemic. 

Widespread misconception of Medicare Part D enrollees' out-of-pocket exposure

Subscribe (free) to xpostfactoid

I object

Late last year, I took some pains to tease out the out-of-pocket (OOP) exposure of Medicare Part D enrollees up to the point where they reach the so-called "catastrophic threshold" of coverage. Beyond that point, they're responsible for a comparatively low 5% of subsequent costs until the end of the coverage year. 

The answer is no real mystery: it's well understood by involved professionals and scholars. It's just awfully hard to derive from general news coverage and even trade press coverage or scholarly coverage.

The exposure up to the catastrophic threshold in 2022 is $2,937, despite an often-cited cap of $7,050, referred to in the trade as the trOOP cap, or true out of pocket cap. 

Attention, Bernie Sanders: Medicare benefits from Inflation Reduction Act begin in 2023

Subscribe (free) to xpostfactoid

Free in 2023

Senate Democrats' passage of the Inflation Reduction Act yesterday evening was an exercise in the art of the possible, the culmination of a year-long immersion in the reality principle. Senate Democrats as a body probed to the last minute what first Manchin and finally Sinema would allow them to pass, and ultimately maxed out on that allowance. 

The result is powerful legislation that gives us a fighting chance to mitigate the worst effects of climate change and sets up a starter home for Medicare to negotiate prescription drug prices. It also boosts the perhaps still-long odds that Democrats can hold the Senate and House and so stave off the Republican threat to democracy itself.

How much drug price control are we getting in the Inflation Reduction Act?

Subscribe (free) to xpostfactoid

When media addresses the prescription drug cost control measures in the Inflation Reduction Act, the provisions empowering Medicare to negotiate the price of select high-value drugs tends to suck up all the attention. 

Rightly, perhaps. While the negotiation regime is slow to start (beginning with 10 drugs to be negotiated in 2026), modest in number (rising to 20 drugs negotiated in 2029), and abjuring reference pricing from European countries (instead capping prices at a set discount of average U.S. prices), it establishes a vital principle, and the scope and terms of negotiation may be expanded and strengthened over time. 

That said,  a lower-profile provision that kicks in quickly (in 2023) is projected (by the Congressional Budget Office) to save/raise roughly as much money as drug negotiation: Inflation caps on the prices of drugs currently on the market. If a drug manufacturer raises the average price charged for a given drug by an amount that exceeds the consumer price index for urban consumers (CPI-U) it must rebate the difference to Medicare. That provision not only starts right away, it also applies to employer-sponsored and individual market health plans as well as Medicare (the rebates accrue from all drugs sold but are paid only to the federal government). CBO projects that the inflation caps will generate $62 billion in savings and $38 billion in revenue over ten years.