Health Insurance Reform Mythbuster: Prescription Drugs for Seniors

Health insurance reform opponents continue to spread myths about components of America's Affordable Health Choices Act. They are trying to scare seniors again, this time about the cost of prescription drugs. But the facts–and independent auditors–disprove this myth.

Myth: The House bill will force seniors to pay more for their prescription drugs.

Fact: Just the opposite. America's Affordable Health Choices Act would significantly reduce prescription drug costs for seniors under the Medicare prescription drug (Part D) program. Specifically, the nonpartisan Congressional Budget Office (CBO) has found that there will be a decrease in seniors' overall spending for prescription drugs (premiums plus out-of-pocket costs) due to the bill's provisions to improve the prescription drug benefit — including the closing of the “doughnut hole” coverage gap.

The bill contains significant improvements in the current Medicare prescription drug benefit. As a result of these improvements, in its report, the nonpartisan CBO has found:

[Under the bill,] beneficiaries' spending on prescription drugs apart from the premiums would decrease, on average. That reduction in cost sharing would outweigh the increase in premiums, again on average — so beneficiaries' total prescription drug spending would fall on average.

AARP has welcomed the news, with a statement from Nancy LeaMond, executive vice president:

The skyrocketing costs of prescription drugs, coupled with a broken health care system, will drive up Part D premiums by more than 80 percent if we do nothing to change the status quo… the fact is provisions in health care reform would lower drug spending for people in Medicare. Health care reform provisions now under consideration would close the doughnut hole over time, reduce costs immediately for those who fall into the gap and lower average total drug spending for people in Medicare. Opponents of reform may use today's projections to try to stall reform, but we hope they will look at all the facts before jumping to a false conclusion.

In addition, a separate analysis by the CMS Office of Actuary confirms that the premium change is driven by the elimination of the so-called “doughnut hole.” This change improves the Medicare drug benefit so seniors will no longer lose drug coverage when they need it most.
Beneficiary Spending in the Part D Donut Hole

For example, for a senior with $12,000 in annual drug costs in 2019, total out-of-pocket spending would decrease by over $5,000 annually. America's Affordable Health Choices Act would also save taxpayers tens of billions of dollars by reducing overall Part D drug costs and eliminating the windfall price increased received by drug manufacturers when dual eligible beneficiaries were switched from Medicaid drug coverage to Medicare Part D.

Learn more about how America’s Affordable Health Choices Act will lower prescription drug prices under Medicare>>