Starting January 1st, seniors enrolled in Medicare will have a yearly cap of $2,000 on out-of-pocket spending for prescription drugs, thanks to the Inflation Reduction Act. This change is expected to greatly benefit cancer patients who struggle with the high costs of their medications. One such patient, Diana DiVito from Canonsburg, Pennsylvania, was shocked by the initial co-payment for her cancer drug, Imbruvica, in 2016.
DiVito, now 83 years old, was diagnosed with chronic lymphocytic leukemia in 2005 and underwent treatment that included chemotherapy. When her cancer recurred, she began taking Imbruvica. Over the years, she ended up spending $56,000 out-of-pocket on this daily pill, with her co-payments increasing annually. The new $2,000 cap will apply to all prescription drugs covered under Medicare Part D, offering relief to millions of beneficiaries, including DiVito.
Previously, Medicare recipients had to spend over $7,000 out-of-pocket before reaching catastrophic coverage, where insurance covers most of the drug costs. This often led to financial strain at the beginning of the year for individuals like DiVito. With the new cap, patients can spread out their payments over the year, reducing the financial burden and stress.
This legislation, following widespread concerns about the steep prices of prescription drugs in the U.S., will benefit over 65 million Medicare enrollees, particularly older adults. Studies show that cancer patients, in particular, face substantial out-of-pocket expenses for medications. The cap aims to provide significant savings for millions of beneficiaries and alleviate the financial challenges associated with accessing essential prescription drugs.
Mary and Jim Scott, residents of Oregon and Medicare enrollees, are anticipating savings exceeding $3,000 in the upcoming year. The couple experienced a significant surge in out-of-pocket prescription drug expenses, reaching $8,000 in 2023, compared to their typical annual expenditure of $240. This spike was a result of a challenging period, during which Jim, 83, battled various severe health conditions such as congestive heart failure, acute kidney injury, and bladder cancer.
Although a new cap on expenses will be implemented, it will not cover drugs administered in a medical setting (covered by Medicare Part B), leaving Jim accountable for the costs of chemotherapy not included in his insurance coverage. Nonetheless, Mary, 73, expressed a sense of relief at the prospect of reduced financial burdens after enduring over a year of grappling with exorbitant cancer care costs. This development will facilitate the couple in managing their finances more effectively and focusing on priorities such as Jim’s well-being, their grandchildren, their beloved dog, and their garden.
Regarding fixed incomes, Juliette Cubanski, deputy director of the Medicare policy program at KFF, highlighted the absence of an annual cap on out-of-pocket costs under Medicare Part D over the past two decades. An analysis conducted by Cubanski indicated that approximately 1.5 million Medicare beneficiaries faced prescription drug expenses surpassing $2,000 in 2021 and would have benefited from the proposed cap. Notably, 200,000 Medicare enrollees spent $5,000 or more on prescriptions that year, underscoring the financial strain experienced by individuals requiring costly medications.
Furthermore, Cubanski emphasized the significance of the cap for individuals with lower annual expenditures, emphasizing the reality that unforeseen medical conditions could necessitate expensive treatments. The potential impact of medical costs on retirees was also acknowledged, with many individuals risking financial hardship or bankruptcy due to substantial healthcare expenses.
Commenting on the financial challenges faced by cancer patients, Arthur Caplan, head of the division of medical ethics at NYU Langone Medical Center, highlighted the exorbitant costs associated with cancer treatments. A survey by the American Cancer Society’s Cancer Action Network revealed that nearly half of cancer patients grapple with medical debt, despite having insurance coverage.
In a personal account, George Valentine, a 73-year-old resident of Philadelphia, shared his experience of being diagnosed with chronic lymphocytic leukemia in 2002. The costly medications required for his condition amounted to approximately $14,000 per month. While George had adequate coverage through his job-based health insurance during his career in the IT sector, his retirement in 2019 exposed a gap in Medicare’s coverage, lacking an out-of-pocket spending limit and necessitating him to bear 5% of his medication costs post reaching the catastrophic coverage phase.
“Five percent of $14,000 is a significant amount,” he remarked. “I would reach the catastrophic phase by February each year, leaving me with a burden of approximately $700 per month for the rest of the year, with no end in sight.”
Valentine, who now advocates for the PAN Foundation, a nonprofit organization providing financial assistance to patients with life-threatening chronic illnesses, expressed his desire for the out-of-pocket cap in the upcoming year to be reduced to “zero.” However, he noted that with the current $2,000 cap, he can now find some peace of mind and rest easier at night.
“What truly matters is that once I hit $2,000, I no longer have to worry,” he explained.
