WASHINGTON, DC - Ways & Means Committee Ranking Member Richard Neal (D-MA) and Energy and Commerce Ranking Member Frank Pallone, Jr. (D-NJ) today introduced The Lower Out-of-Pocket Costs for Seniors Act, which would make permanent an Affordable Care Act provision that limits the growth of consumer out-of-pocket spending in the Medicare Part D program. The Democrats’ proposal would save Medicare beneficiaries billions of dollars annually on prescription drugs.
Under the current system, once Medicare beneficiaries hit an annual out-of-pocket spending threshold they can access what is known as catastrophic coverage that allows seniors to pay significantly less for their prescription drugs. However, the catastrophic coverage threshold is scheduled to jump in 2020, increasing the amount of money beneficiaries must spend to access the lower catastrophic coverage rates for prescription drugs.
The Lower Out-of-Pocket Costs for Seniors Act would make the current out-of-pocket threshold permanent, averting the looming 2020 threshold increase and saving seniors billions of dollars in out-of-pocket costs.
“Health care, and specifically prescription drugs, can cost seniors thousands of dollars a year. For Americans who are retired or on a fixed income, any increase in those out-of-pocket costs can become a significant financial burden," said Ranking Member Neal. “With this legislation, Congressman Pallone and I want to prevent the Medicare Part D prescription drug costs from skyrocketing and draining money out of Americans’ savings. Limiting the growth of the out-of-pocket threshold will not only help seniors afford the medication they need, but it will provide them with greater long-term financial security."
“Seniors are already struggling with out-of-pocket costs and simply cannot afford to spend more on prescription drugs," Ranking Member Pallone said. “This legislation is a commonsense proposal that will prevent seniors from facing the sticker shock of higher prescription drugs costs in 2020. Congressman Neal and I know that the cost of prescription drugs are skyrocketing, and the House should pass our legislation to ensure that seniors are not forced to spend more of their monthly income on medications they need to live healthier lives."
Under the current system, Medicare beneficiaries already spend nearly $27 billion annually on out-of-pocket on prescription drugs costs. The cost of prescription drugs for older Americans is on average $26,000 per year while the median annual income for a Medicare beneficiary is $26,200.
The Lower Out-of-Pocket Costs for Seniors Act is supported by the National Council on Aging, National Committee to Preserve Social Security and Medicare, Alliance for Retired Americans, Medicare Rights Center, and the Center for Medicare Advocacy.
“The National Council on Aging (NCOA deeply appreciates the leadership of Ranking Members Frank Pallone of the Energy and Commerce Committee and Richard Neal of the Ways and Means Committee, in proposing legislation to help people with Medicare afford their expensive prescription drugs," said Howard Bedlin, NCOA Vice President for Public Policy and Advocacy. “The Lower Out-of-Pocket Costs for Seniors Act prevents the out-of-pocket threshold for catastrophic coverage from increasing by $1,250 to $6,350 in 2020. If this amount is permitted to increase, beneficiaries would have to pay more before reducing their out-of-pocket coinsurance to just 5% of prescription drug costs after the threshold is reached. Half of Medicare beneficiaries have incomes below about $26,200, and millions have multiple chronic conditions that require costly prescription medications. These seniors and people with disabilities could save thousands of dollars in reduced out-of-pocket costs under the bill. We urge members to cosponsor the bill and encourage a bipartisan effort to pass this crucial legislation."
