Brief Capping Medicare Beneficiary Part D Spending at $2,000: Who Would It Help and How Much?
Anuj Gangopadhyaya, Bowen Garrett
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The Build Back Better Act, passed by the US House of Representatives in November 2021, included several provisions to lower high prescription drug costs including capping out-of-pocket spending on prescription drugs for Medicare Part D enrollees at $2,000. In this brief, we focus on the $2,000 cap on out-of-pocket spending for Medicare Part D enrollees, examining the number of people who might benefit from the provision and their characteristics, the resulting amount of savings for affected beneficiaries, and the provision’s effects on Medicare spending. We find that, in 2019, about 866,000 Part D enrollees without access to the program’s low-income subsidy program would have benefitted from the introduction of a $2,000 spending cap for prescription drugs. These enrollees would have saved $900 on average. We show that this savings would provide some relief to these beneficiaries and their households, since their average total out-of-pocket spending for all Medicare-covered services was $7,100. We estimate that implementing such an enrollment cap would have raised overall drug spending by about $782 million in 2019 and would raise Medicare Part D expenditures by less than 1 percent of total Part D spending in that year. Since it is likely that enrollees who incur high out-of-pocket drug spending in a given year will likely incur similar or greater expenses in subsequent years, a Part D spending cap would help protect individuals and their families from withstanding high drug payments year after year, without substantially raising the program’s costs.

Research Areas Health and health care Aging and retirement
Tags Health insurance Medicare
Policy Centers Health Policy Center