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Medicare Part D cliff ahead

Juliet Johnson   |     June 21, 2018   |   SHARE THIS

Medicare Part D has been providing seniors with access to prescription drug coverage that meets their needs for more than a decade. Today, more than 42 million people are enrolled in Part D and 90 percent of them are satisfied with the program. But for many seniors the program could work even better and be made fairer by improving affordability and predictability.

There are lots of conversations in Washington right now about how to change Part D, but there’s one looming problem Congress could address right now that would make a significant difference to the most vulnerable seniors: fixing the Medicare Part D out-of-pocket cliff.

When Medicare Part D was created, it included catastrophic coverage for vulnerable seniors with higher medicine spending. There are four phases for seniors in Part D, all based on their level of spending:

  1. The deductible phase
  2. The initial coverage phase
  3. The coverage gap, also known as the “donut hole”
  4. The catastrophic phase, which provides relief to seniors with the highest costs

Once seniors’ out-of-pocket spending reaches a designated amount, they can move out of the donut hole and into the catastrophic phase, where their payment responsibility for their medicines drops to five percent.

Each year the amount of out-of-pocket prescription drug spending required to move into the catastrophic phase increases slightly. A measure originally included in the Affordable Care Act, implemented in 2010, temporarily slowed the growth rate of that increase. But now that measure is set to expire at the end of 2019, creating a spike in out-of-pocket costs for seniors known as the “Medicare cliff”. 

Unless Congress acts before 2019 to address this looming cliff, in 2020 the out-of-pocket threshold to reach catastrophic coverage will jump up as though the ACA had never slowed the growth rate in the first place. This will increase the donut hole by more than $1200 between 2019 and 2020, raising out-of-pocket costs for the most vulnerable seniors with significant health care needs.

If we’re going to change Part D, shouldn’t we improve it for seniors by saving them money and strengthening it for the future?  Fixing the cliff will save money for many seniors with the highest costs while strengthening the program for the long term.  Congress should act before 2019 to fix the out-of-pocket cliff so the successful Part D program can continue to provide seniors with the coverage they need.

Learn more at LetsTalkAboutMedicare.org

Juliet Johnson

Juliet Johnson is a deputy vice president of public affairs at PhRMA focusing on federal advocacy communications. Prior to joining PhRMA, Juliet was most recently the Director of Communications at CMS. She previously worked for a senior Member of the U.S. House Energy and Commerce Committee, and she has spent a number of years at large public affairs firms providing strategic communications counsel, coalition management and media relations to clients. Outside the office, Juliet enjoys long dinners with friends, SoulCycle, SEC football, her golden retriever Shiloh and a good scotch.

Topics: drug cost, Affordable Care Act, Burden on Patients, Part D, Medicare, out of pocket costs, Medicare Monday, health care spending

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