Congress should cap Medicare out-ofpocket drug costs

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A bipartisan group of House lawmakers recently unveiled a bill that would cap Medicare beneficiaries’ out-of-pocket drug costs.

That’s a terrific idea. High out-of-pocket costs prevent many Medicare patients from accessing vital medicines. Limiting those costs would keep folks healthy. And in the long run, the reform could generate savings for our nation’s health system.

Medicare’s “Part D” drug benefit is different from other entitlements. Rather than administer benefits directly, the government subsidizes Part D plans sold by private insurers. Insurers are largely free to design Part D plans as they see fit, as long as the plans meet certain requirements. Insurers compete for beneficiaries’ business by offering a variety of plans with different premiums and cost-sharing structures.

Part D’s unique, market-based structure has successfully contained costs for both the program and its beneficiaries. In its first decade, Part D cost about $350 billion less than originally projected. Part D premiums have also remained stable, and are about half of initial estimates.

Thanks to Part D, more than 40 million elderly patients now have access to reasonably priced medications.

 

 

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