Did the Inflation Reduction Act Actually Increase Medicare Costs? | Simplefill
Although it provides significant cost relief for beneficiaries, the Inflation Reduction Act (IRA) is designed to reduce government spending on prescription drugs by restructuring Medicare Part D liability. Passed by the Biden administration in 2022, the law’s primary goals are to lower out-of-pocket costs for enrollees and enable Medicare to negotiate prices.
But has the shift in financial responsibility been entirely beneficial? Here’s a closer look at the act’s impact on medication and overall health care costs.
The Benefits of the Inflation Reduction Act for Medicare
The Inflation Reduction Act offers a few benefits for Medicare enrollees that could affect your annual health care expenses significantly.
Out-of-Pocket Cost Caps
The Inflation Reduction Act took one huge step in better managing out-of-pocket prescription medication costs by placing a cap on them. Beginning in 2025, people enrolled in Medicare Part D have an annual cap of $2,000 on out-of-pocket expenses. These include copays, deductibles, and coinsurance.
Medication Negotiations
The act also requires Medicare to negotiate with pharmaceutical companies for high-cost drugs. If certain medication costs increase faster than inflation rates, Medicare can receive a rebate from the pharmaceutical companies, too, which incentivizes them to avoid spikes in prices when there’s a high demand for a particular medication.
It’s important to note that there are only a few medications currently eligible for these negotiations. That number is expected to increase over time.
Insulin Cap
Enrollees who rely on insulin also benefit from the Inflation Reduction Act. The legislation ensures that people enrolled in Medicare Part D don’t pay more than $35 a month for this vital medication.
Elimination of Catastrophic Coverage Phase Costs
The catastrophic coverage phase is a stage in Medicare Part D that starts when an enrollee surpasses a certain amount on prescription drugs for the year. With the passing of the Inflation Reduction Act, beneficiaries no longer have to pay during this coverage phase. This limits total drug spending to about $3,300.
The Drawbacks of the Inflation Reduction Act for Medicare
Unfortunately, there have been drawbacks to the act, too. These problems are poised to cause serious price spikes for enrollees.
Rising Part D Premiums
Enrollees pay less on medications with the Inflation Reduction Act, but this translates into higher liability for the insurers. To counteract this, premiums have begun to rise, and that trajectory is expected to continue in 2026. Forecasts predict up to a 20% hike in premiums.
Stricter Utilization Management
To address the new price-setting rules that the Inflation Reduction Act introduced, insurers will likely be stricter in covering certain medications. This means more people could struggle to access the drugs they need.
Along the same vein, insurers are reducing their offerings of other services. Some may no longer cover dental, vision, or hearing.
Subsidy Reductions
Medicare Part D plans are on the cusp of suffering because of the cuts to their federal subsidy program. This can also result in higher premiums.
Get Affordable Access to Prescription Medications
Simplefill is a full-service prescription assistance company that researches, qualifies, and maintains patients’ enrollment in all sources of assistance available to them.
Apply today by calling 877-386-0206. A caring Simplefill representative will contact you within 24 hours to discuss your application and, if qualified, enroll you in the program.
Frequently Asked Questions
Will the Inflation Reduction Act Impact Innovation?
It could. Limiting how much pharmaceutical companies can charge for certain drugs could mean they’ll focus less on those and more on the medications that aren’t eligible for price negotiations. That could lead to less access.
How Many Medications Are Eligible for the Medicare Negotiation Process?
For 2026, there are 10 medications selected for negotiations. Medicare Part D covers these medications, and they meet a variety of other criteria that the law requires. Some of the drugs include Eliquis, Jardiance, and Xarelto. The chosen options address serious issues, such as blood clots, diabetes, congestive heart failure, and blood cancers.
Who Can Sign Up for Medicare Part D?
To enroll in Medicare Part D, you must first be able to enroll in Medicare. This means that you need to be at least 65, have certain health conditions, or have a qualifying disability. You’ll also need to enroll in Part A or B, sign up during an open enrollment period, and live in the plan’s service area. If you’re a first-time enrollee, you have a seven-month enrollment period you can take advantage of.
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