Prescription medicines are one area that has a history of rising faster than inflation as people and families struggle with rising prices.
Sen. Joe Manchin of West Virginia and Senate Majority Leader Chuck Schumer of New York have now introduced a new Senate reconciliation plan that seeks to provide relief for Americans from these escalating healthcare costs.
According to Tricia Neuman, senior vice president and executive director for the programme on Medicare policy at KFF, a non-profit organisation focused on national health issues, the Senate proposal includes significant reforms like allowing Medicare to negotiate prescription drug prices and establishing ceilings on increases to those prices.
It also contains a $2,000 maximum on out-of-pocket spending, which would help Medicare recipients who take expensive prescription medicines.
“It’s really the first time since 2010 that Congress has moved forward on any legislation to improve drug coverage substantially for people on Medicare,” Neuman said.
A notable aspect of the law is that it would restrict drug price increases for those with private insurance.
After the parliamentarian grants the go-ahead that the items in the package may be introduced by a Democratic majority, the proposal is anticipated to be reviewed by the Senate the following week.
According to Neuman, the idea is remarkably similar to a law that was approved by the House and that will be taken into consideration if the Senate’s version is passed. This week, a few House Democrats already voiced their strong support for the legislation.
“We have a once-in-a-generation opportunity to get this across the finish line, and I am deeply committed and excited about getting it done,” during a webcast this week sponsored by Invest in America, Rep. Colin Allred, a Democrat from Texas, said.
A possible approach to combat inflation
During a different webcast this week that was also hosted by Invest in America, Rep. Susie Lee, D-Nev., referred to the idea as “life-saving legislation” for families and seniors.
“It will ensure that drug companies will no longer be able to raise prices faster than the rate of inflation, so that families can keep up with those costs,” Lee said.
According to Glen Fewkes, director of health-care access and affordability at AARP, prescription medicine prices have occasionally grown two to three times the rate of inflation. Fewkes made this statement during the Invest in America event.
Gas would now cost $12.20 a gallon and milk would cost $13, he said, if other prices rose at the same rate.
With a median annual income of $30,000, Fewkes noted that limiting out-of-pocket Medicare Part D prescription drug expenses to $2,000 would have a significant impact on the average Medicare recipient. Medicare recipients currently pay 5% out-of-pocket once they have spent $7,050 on medical expenses for the year.
However, 5 percent might be a significant burden for those who take many drugs or pricey prescriptions that cost five figures, according to Fewkes.
“We feel this can really tackle inflation and really put money back into seniors’ pockets,” Fewkes said.
Amendments to the Senate bill
Some expensive pharmaceuticals covered by Medicare Parts B and D would be subject to price negotiations with the federal government. The number of negotiated pharmaceuticals would gradually expand from ten in 2026 to fifteen in 2027, fifteen in 2028, and twenty in 2029.
Additionally, the plan would restrict annual increases in the cost of prescription medications for those with Medicare and commercial insurance. Drug producers who raise their prices more quickly than inflation would be required to pay rebates.
The Medicare Part D copay beyond the catastrophic Medicare Part D threshold would be repealed, and there would be a $2,000 out-of-pocket spending cap on Part D costs.
Additionally, it would end cost sharing for adult immunizations under Medicare Part D. Medicaid and the Children’s Health Insurance Program would also benefit from enhanced vaccine access.
The bill also extends for three more years the subsidies for individuals who purchase their own health insurance, which were slated to expire this year.
Approximately how much money you’ll be able to save
According to Lee, the American Rescue Plan reduced health insurance premiums for millions of Americans. The typical middle-class family of four would experience a premium increase of almost $6,600 if those subsidies were to end. The typical middle-class couple approaching retirement will have to pay an additional approximately $16,000.
“Families simply can’t afford that right now,” Lee said. “We must get these subsidies passed.”
KFF notes that because the precise drugs have not yet been selected and the price changes have not yet been established, it is difficult to estimate the exact amount of money Americans may save on prescription medications.
“It’s pretty hard to say how many people would benefit and what their benefit would be,” Neuman said.
In contrast to the House version, insulin was notable for being left out of the Senate measure as a medicine subject to negotiation, according to Neuman. She added that the House plan also intended to set the cost of insulin at $35 per month for those with Medicare or private insurance.
Other strategies to reduce insulin costs are being discussed separately in the Senate. If any of those ideas—or all of them—can be included in the reconciliation measure, that is still to be determined, according to Neuman.