Eighty-five percent of older voters think Medicare should be allowed to negotiate drug prices, like it does for all other medical services, according to TSCL’s 2016 Senior Survey. Prescription drugs are one of the fastest growing expenses in retirement for older Americans, second only to Medicare Part B premiums. Drug costs grew 4.6 times faster than the Social Security cost-of-living adjustment over the past 16 years.
Spiking prescription drug costs rank as a top health concern with voters nationwide, according to surveys by the non-partisan Kaiser Family Foundation. Both presidential candidates have said they favor allowing Medicare to negotiate drug prices.
Most Medicare beneficiaries only pay a co-payment or co-insurance, and their drug plan covers the rest of the cost. Yet rapidly rising retail costs nevertheless affect consumers in the following ways:
- Higher drug plan premiums: Even the people who don’t take prescription meds on a regular basis still must pay premiums to maintain their drug plan coverage. Premiums for 2016 increased an average of 13%, reflecting a similar increase in drug costs.
- Drug plans shift more costs to consumers through higher formulary tiers: Expensive drugs are usually found in a drug plan’s highest formulary tiers. As drug costs have spiked, plans created new higher tiers, like “non-preferred” generics, that require higher co-pays or co-insurance.
- More consumers pay co-insurance rather than co-pays. Co-pays are a fixed dollar amount, and some plans may charge co-pays as low as zero for common generics. But co-insurance is a percentage of the cost of the prescription or medical therapy. In 2016 more drug plans are charging co-insurance instead of co-pays, even for generics. For example, if a Part D plan has a $6.50 co-pay for a $55 generic, then that’s all consumers would pay. But if the plan imposes a 25% co-insurance on covered drugs, consumers pay $13.75 instead for the same drug.
- More people spend through the Part D initial coverage limit ($3,310 in 2016) and hit the doughnut hole where they pay a higher percentage of the cost. Twenty-seven percent of respondents to TSCL’s 2016 Senior Survey said they hit the Part D doughnut hole coverage gap in 2015. The initial coverage limit includes not only what consumers pay out-of-pocket, including deductibles and co-insurance or co-pays, but the portion that drug plans pay as well. Higher drug costs will burn through the $3,310 Part D initial coverage limit more quickly.
- More consumers don’t fill prescriptions or don’t take the prescribed dosage because they can’t afford it. A study of over 75,000 commercially insured patients found that 30% failed to fill a new prescription. New prescriptions for chronic conditions such as high blood pressure, diabetes, and high cholesterol were not filled 20%-22% of the time.
Are higher drug costs affecting you? You can share your input or tell your story one of three ways.
1. Fill this Contact Us form; 2. Send us an email; or 3. Send us a letter at: The Senior Citizens League, 1001 N. Fairfax St. #101, Alexandria, VA 22314.
Sources: “Medicare Drug Plan Enrollees Would Face Average 13% Premiums Increase”, Kaiser Family Foundation, October 13, 2015. “Nearly 1 in 10 Adults Skips Meds Due to Cost”, CDC Says, HealthDay.com, January 29, 2015.