Urban Institute: Part D $2,000 out-of-pocket cost cap could benefit nearly 1M seniors

A proposal to cap Medicare Part D drug costs would benefit nearly 1 million seniors, according to a new study.

The study, released Tuesday by the Robert Wood Johnson Foundation, comes as Congress is attempting to salvage drug pricing reforms before the midterm elections. One of the proposals being floated has been a $2,000 cap on out-of-pocket prescription drug costs on Part D beneficiaries that don’t already qualify for cost-sharing protections.

If the cap is put in place, it would benefit more than 860,000 seniors, the study conducted by the think tank Urban Institute found. Medicare drug spending would also increase by less than 1%.

“Ultimately, a spending cap would enhance the overall benefit of the Medicare Part D program without substantially raising Medicare program spending,” said Anuj Gangopadhyaya, senior research associate at Urban Institute, in a statement.

Urban’s researchers used a simulation model to estimate Medicare and out-of-pocket spending on Part D in 2019. It estimated there were about 866,000 Part D enrollees that year who did not get low-income subsidies to help cover the costs of drugs.

It found Part D enrollees had average total drug expenditures of about $19,800, and $2,900 would be spent out-of-pocket by the beneficiary.

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Certain enrollees would also benefit more from the cap based on their expenses. For instance, 40% of beneficiaries who had out-of-pocket costs above $2,000 spent up to $2,500. Another 30% spent between $2,500 and $3,000.

There were 18% that spent more than $3,500 in out-of-pocket costs.

The study comes as Congress is trying to figure out a path forward on drug price reform ahead of the 2022 midterms.

A $2,000 cap on out-of-pocket Part D costs was included in the Build Back Better Act, a major $1.75 trillion social spending package that passed the House earlier this year. The legislation, however, has stalled in the Senate due to objections from Sen. Joe Manchin, D-West Virginia.

However, Democrats are now trying to figure out which pieces of drug price reform could survive in a slimmed-down package this year.

“The cap and other drug provisions could remain in a potential slimmed-down budget reconciliation bill that might pass in both the House and the Senate,” Urban’s study said.

Another potential reform could be placing a cap on Part D drug costs that would prevent drug companies from hiking prices beyond the cost of inflation.