On the First Anniversary of the Inflation Reduction Act, Millions of Medicare Enrollees See Savings on Health Care Costs
More Savings on Prescription Drug Costs to Come
One year ago today, on August 16, 2022, President Biden signed into law landmark legislation to lower health care costs for millions of Americans, known as the Inflation Reduction Act. This historic law extends Marketplace affordability, caps the cost of insulin at $35 per month for people with Medicare, and improves access to affordable prescription drugs for millions of Americans.
“The first anniversary of the Inflation Reduction Act is cause for celebration, as millions of Americans are already saving money on health care,” said HHS Secretary Xavier Becerra. “As a result of this law, individuals purchasing Marketplace coverage are paying less in premiums, people with Medicare are benefiting from the $35 cap on insulin, and saving on free, recommended vaccines, and we are strengthening Medicare for the next generation. The Biden-Harris Administration is delivering lower prescription drug costs, making health insurance more affordable, and making the economy work for working families.”
“The historic Inflation Reduction Act builds on the Biden-Harris Administration’s efforts to make health care more affordable and accessible that are life changing for millions of Americans,” said Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure. “On this first anniversary of the Inflation Reduction Act, Americans are seeing the benefits – such as free recommended vaccines, lower insulin costs, and the enhanced tax credits that help more people afford their premiums in the Marketplaces.”
The Inflation Reduction Act extends enhanced financial help to purchase plans on HealthCare.gov and State-based Marketplaces, saving enrollees money on their premiums. National estimates show that, on average, consumers receiving tax credits continue to save over $800 in premiums per year.
The extension of the enhanced financial help has led to record enrollment—16.4 million people signed up or were automatically re-enrolled in health insurance coverage through HealthCare.gov Marketplaces and State-based Marketplaces during the 2023 Open Enrollment Period. Nationwide, 4.6 million more consumers are receiving financial assistance in 2023, compared to 2021, representing 90% of all 2023 plan selections, meaning, 90% of people selecting plans are receiving help to pay for premiums.
The HHS Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a new report today highlighting the provisions of the Inflation Reduction Act that are expected to lower prescription drug costs and improve access to prescription drugs for the more than 65 million Americans enrolled in the Medicare program. This comprehensive report details key findings from the first year of implementing Inflation Reduction Act provisions. Highlights include:
- Monthly Cost for Insulin Capped at $35 under Medicare:
- The Inflation Reduction Act caps out-of-pocket spending at $35 per month’s supply of each insulin product covered under Medicare. These provisions are making insulin more affordable for many people covered by Medicare.
- An estimated 1.5 million people with Medicare who use insulin would have saved $734 million in Part D and $27 million in Part B – or approximately $500 in average annual savings per person among those benefiting from the provision – if these caps had been in effect in 2020.
- Recommended Vaccines Covered in Medicare without Cost-sharing:
- As of January 1, 2023, the Inflation Reduction Act eliminated out-of-pocket costs for vaccines covered under Medicare Part D that are recommended by the Advisory Committee on Immunization Practices (ACIP) and are not covered under Medicare Part B, including vaccines to prevent herpes zoster (shingles); tetanus and diphtheria (Td); tetanus, diphtheria, and pertussis (Tdap); hepatitis A; and hepatitis B.
- In 2021, about 3.4 million people received vaccines under Part D, and annual out-of-pocket costs were $234 million. This would have translated to nearly $70 in savings on out-of-pocket spending per Medicare enrollee receiving a vaccine covered under Part D if the new vaccine provisions had been in effect.
- Medicare Part D Benefit Redesign and Out-of-Pocket Cap:
- The Inflation Reduction Act will make key changes to improve drug affordability for seniors and people with disabilities who have Medicare Part D.
- Starting in 2024, there will be a cap on annual out-of-pocket costs in Medicare Part D. In 2025, this annual cap will drop to $2,000 and will be indexed annually thereafter. The Inflation Reduction Act also includes other provisions designed to decrease spending for Part D enrollees and taxpayers.
- The Inflation Reduction Act’s redesign of Medicare Part D is projected to reduce enrollee out-of-pocket spending by about $7.4 billion annually among more than 18.7 million enrollees (36 percent of Part D enrollees) in 2025 – nearly $400 per person among enrollees who will have savings in out-of-pocket costs under the law.
As the Biden-Harris Administration continues to implement the lower cost prescription drug law, there are more savings to come, both to people with Medicare and to the Medicare program. For the first time in history, Medicare has the ability to directly negotiate the prices of covered prescription drugs due to the Inflation Reduction Act. By September 1, the Administration will publish the list of the first ten prescription drugs covered under Medicare Part D selected for Medicare drug price negotiations. The negotiations will occur in 2023 and 2024 with the negotiated prices effective beginning in 2026. Additional savings are also coming to those eligible for Medicare’s Extra Help program. Beginning in 2024, the Extra Help program will expand for beneficiaries earning less than 150% of the federal poverty line. People with Medicare who qualify for Extra Help will pay $0 for their Medicare drug plan premium and plan deductible, and a reduced amount for both generic and brand-name drugs. Find out more about the Extra Help program at http://www.Medicare.gov/ExtraHelp.
The full HHS report, “The Inflation Reduction Act of 2022: One Year Anniversary Highlights from ASPE Drug Pricing Reports”, is available at https://aspe.hhs.gov/reports/inflation-reduction-act-2022-one-year-anniversary-highlights-aspe-drug-pricing-reports.
In addition to this comprehensive report detailing the benefits of the Inflation Reduction Act, ASPE also recently released state by state fact sheets that demonstrate enrollee savings on Medicare Part D out-of-pocket costs, insulin, vaccines, and Marketplace premiums. Fact sheets for all 50 states and the District of Columbia can be found here: https://www.aspe.hhs.gov/reports/state-fact-sheets-impacts-ira-aca-lowering-health-care-costs
A fact sheet on the Inflation Reduction Act accomplishments and its implementation is available at https://www.cms.gov/newsroom/fact-sheets/anniversary-inflation-reduction-act-update-cms-implementation.