Finally some good news for Medicare especially for Part D recipients. President Trump signed the new budget deal last week that had some long lasting relief to Medicare enrollees. Here are the highlights;
Medicare’s Independent Payment Advisory Board has been killed. It was authorized by the Affordable Care Act to serve as a check on higher Medicare expenses. It was quickly labeled a death panel by opponents and became such a lightning rod that no board members were ever named.
The rules for Medicare’s Part D drug plans were changed. The much-maligned coverage gap (or donut hole) in these plans has been shrinking for years under the Affordable Care Act, and was supposed to end in 2020, at which time consumers in the gap would pay no more than 25 percent of the costs of their drugs. That end date was moved up a year to 2019.
Consumers who have spent a lot on drugs and have entered the so-called catastrophic phase of Part D plans will pay no more than a few dollars for each prescription or, for costly drugs, no more than 5 percent of the cost of the drug. While this percentage will not change, the responsibility for paying the other 95 percent of the cost will be borne even more heavily by the government, and is expected to save pharmaceutical companies billions of dollars. Taxpayers, of course, ultimately will be on the hook for those higher government expenses. It’s a more significant if largely invisible change.
Medicare’s caps on covered expenses for outpatient therapy have been officially repealed. People with persistent therapy needs have bumped against these caps for more than 20 years, and Congress has regularly eased those rules. While claims above current cap levels may be subject to review, people who legitimately need extensive therapy will not have to depend on year-to-year congressional fixes.
Medicare’s high-income premium surcharges will carry even more of a bite for wealthier enrollees. Those making more than $500,000 a year ($750,000 for couples) will pay 85 percent of the actual costs of Part B and D in 2019, up from 80 percent this year. Most Medicare enrollees pay premiums that equal about 25 percent of these costs.
Congress also made numerous and potentially far-reaching changes to the rules for Medicare Advantage plans. That includes allowing such plans to pay for limited long-term care expenses – something that until now has not been covered by Medicare.
If this wasn’t enough, the Trump administration finally seems ready to make good on its repeated commitment to do something to lower high prescription drug prices for Medicare beneficiaries. The Council of Economic Advisers issued a report late last week laying out many ideas.
The White House reportedly will back a plan to permit those on Medicare to share in substantial discounts that drug manufacturers currently pay to Medicare drug insurers. People with commercial health insurance regularly get manufacturer discounts, which can save them thousands of dollars a year on costly medications. Medicare prohibits such manufacturer discounts, and while pharmaceutical companies do provide hefty discounts to Part D insurers, they are not passed along to consumers.
The law has already been signed by President Trump, so whether these are good changes or not is moot for the time being.
Part D insurers generally oppose the change, saying that the industry currently uses the discounts to subsidize Part D premiums, and that all consumers would face sharply higher premiums if discounts were shared with the relatively small number of consumers who need expensive medications.
The Trump budget also proposes removing even the 5 percent that people in the catastrophic phase of their drug plan must pay, permitting them to get their drugs for free. While this would be a great deal for the million or so people who spend that much money on prescriptions, other elements of the proposal would raise out-of-pocket spending for other people with Part D plans.