Recently my treadmill became a paperweight. The technician came out and said that it would be better to buy the parts and fix it because the new ones were just not made as well as my old one. A refrain I’ve heard over the years as it relates to heating units, refrigerators, etc.
But Part D? That has IMPROVED over time from a patient perspective. A rare feat indeed.
When the Part D program was launched in 2006, it included a coverage gap. This coverage gap was a phase during which beneficiaries had to pay for their prescription drugs entirely out of pocket once their annual drug costs exceeded a certain threshold and, even during catastrophic coverage beneficiaries paid 5% of their drug costs until the end of the plan year. In 2007, almost 4 million non-low income subsidy beneficiaries had claims that fell into the coverage gap.
The Affordable Care Act phased out the coverage gap by 2020, with manufacturers paying a coverage gap discount of 50%. The Bipartisan Budget Act of 2018 (BBA of 2018) accelerated the closing of the coverage gap to 2019 and increased the manufacturer discount to 70% for non-low income subsidy claims. And that’s where we are in 2023 in terms of benefit design.
A beneficiary that was taking a $600 a month drug in 2006 would spend about $3,700 out of pocket in a year. In 2023, with the coverage gap changes, it would be under $2,200. For 2024, it would be just over $2,200.
But, as we enter the Part D enrollment for 2024, it is important to recognize the big changes we’ll see in terms of catastrophic coverage for beneficiaries. The Inflation Reduction Act caps Part D out-of-pocket spending starting in 2024. That means that a prescription that might have cost over $10,000 a year in 2006 is capped at just over $3,300. While still a significant amount of money – a huge improvement (and going to get even better in 2025.)
Part D is not perfect (a story for another post) but unlike most things, it feels like it is getting better – not worse. And that’s a huge win.