The Affordable Care Act: Saving Prescription Drug Costs for Medicare Beneficiaries

Prescription drug bottleIn February, the Centers for Medicare and Medicaid Services (CMS) released the second annual report on the impact of the Affordable Care Act (ACA) on Medicare drug spending. This report revealed that 6.1 million Americans with Medicare saved $5.7 billion on their prescription drugs—money that otherwise would have fallen into the “donut hole” prescription drug coverage gap that forces beneficiaries to pay for 100 percent of their drug costs once they have reached their prescription drug plan limit.

Since 2010, the ACA has started to gradually close the “donut hole” or Medicare prescription drug coverage gap. More than three million Medicare beneficiaries in the “donut hole” received a 50% discount on covered brand name drugs and a 14% discount on generic drugs. These reductions will continue to increase until the gap is completely closed by 2020. On average, a Medicare beneficiary will save about $5,000 on prescription drug spending by 2022.

When the ACA was signed into a law it outlined ways to improve Medicare by saving money for its beneficiaries, removing unnecessary barriers, and lengthening the life of the program. Under the law, the cost of Medicare premiums remained moderately low. In fact, some individuals paid lower premiums in 2012 compared to what they paid in 2010. For Medicare beneficiaries, these savings meant lower prescription drugs costs and improved access to benefits.

Furthermore, the ACA focuses on efficient long-term cost containment strategies. One way it does this is by increasing access to preventive health services. Last year, through an ACA provision, Medicare beneficiaries accessed preventive services with no deductibles or co-pays. Vaccinations, screenings, and other preventive service are important because they help identify diseases, detect illnesses in their most treatable stages, and allow for the best chance of recovery. This provision removed the out–of-pocket cost barrier to preventive services, thus encouraging seniors to take a proactive approach to their health.

The Medicare program is working and it is becoming stronger, thanks to the Affordable Care Act. You can read the full CMS report here


This blog post was coauthored by Viviane Clement.

 

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