President Joe Biden and Vice President Kamala Harris on Tuesday hailed a new report from the Department of Health and Human Services that said that the 2022 Inflation Reduction Act saved Medicare enrollees nearly $1 billion in the first half of this year.
The Inflation Reduction Act, passed by Democrats with Harris’s tie-breaking vote in the Senate, established a cap on out-of-pocket prescription drug costs for Medicare beneficiaries. For this year, that cap is around $3,500 on average for people with very high prescription drug costs. Next year, the cap will be lowered to $2,000 for everyone enrolled in Medicare’s Part D prescription drug plan.
The Department of Health and Human Services said in its report Tuesday that, as of June 30, nearly 1.5 million people had reached the cap, meaning that they will have no additional cost-sharing for the rest of the year, as will others who hit the cap before January. Before the Inflation Reduction Act, many of those people would have still been responsible for 5% of their drug costs, with no limit on out-of-pocket costs.
HHS says that more than 500,000 Part D enrollees who do not qualify for a low-income subsidy hit the cap over the first half of 2024 and saved a total of $979 million, with average savings of $1,802 per enrollee so far.
If the out-of-pocket limit was already at the 2025 level of $2,000, some 4.6 million enrollees would have hit the threshold
At an event in New Hampshire, Biden and Sen. Bernie Sanders of Vermont highlighted the administration’s efforts to lower drug and healthcare costs. Biden touted the projected healthcare cost savings under the Inflation Reduction Act, which also allowed Medicare to negotiate some prescription drug prices for the first time and capped monthly out-of-pocket insulin costs for seniors at $35 in addition to the $2,000 annual Medicare cap on prescription spending for 2025.
“This change is expected to save 19 million seniors and other people on Medicare, save them — just those ones on Medicare — $7.4 billion out-of-pocket spending starting in January,” Biden said. “But here’s the deal: It’s also going to save the American taxpayers billions of dollars.”
Biden also took aim at former President Donald Trump, who said at his presidential debate against Harris that he has “concepts of a plan” to replace and improve upon the Affordable Care Act. “He has no concept of anything,” Biden said. “No plan."
In a statement, Harris highlighted her tie-breaking vote and said there was much more to come on healthcare costs. “All Americans should be able to access the health care they need – no matter their income,” she said, adding, “I will never stop fighting for the health, wellbeing, and financial stability of the American people.”
Fatima Hussein and Will Weissert of the Associated Press note that while the cap on annual out-of-pocket prescription costs is set to save Medicare recipients more next year, “the change has come at a price for others – it’s contributed to rising drug plan premiums that the government has tried to keep down by paying insurers billions of dollars from the Medicare trust fund. Still, some insurers have raised plan prices significantly – or pulled plans from markets.”
