Capping seniors' out-of-pocket prescription drug costs could increase Medicare prices -- and premiums


11 June 2019 - Medicare’s prescription drug benefit is known as the one federal entitlement program that routinely comes in under budget. Now, a new push is on in Congress to make changes to the program that could increase costs.

Medicare, originally enacted in 1965, has many outdated design flaws. One of those was that the original law only covered prescription drugs if they were administered by a hospital (Medicare Part A) or in a physician’s office (Part B). Drugs that we obtain from retail pharmacies, like CVS or Walgreens, were not covered.

In 2003, under George W. Bush, Congress changed that by adding Medicare’s prescription drug benefit, also known as Part D, in a bill known as the Medicare Modernization Act of 2003. Under Part D, seniors choose among dozens of private plans, who compete for seniors’ business by negotiating drug prices effectively enough to offer retirees the lowest possible premium. Roughly three quarters of the cost of Part D are paid by taxpayers; the rest by seniors through their premiums and out-of-pocket costs.

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Michael Wonder

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Michael Wonder