For Medicare beneficiaries living with life-threatening, chronic and rare diseases, January is the month when seniors and those who are disabled are asked to dig deep into their wallets.
Each turn of the calendar year, Medicare Part D deductibles reset, and those who seek care are told they will need to pay hundreds, even thousands of dollars in out-of-pocket costs for their prescription medications. Half of all Medicare beneficiaries have incomes below $26,200, and for most people living on fixed incomes, making these payments is an extreme financial hardship that often proves impossible.
High deductibles, co-payments and co-insurance limit access to medications that are essential for patients’ well-being, and in some cases, their survival. The Medicare Part D program is in desperate need of reform.
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This year, out-of-pocket costs have risen dramatically by $1,250. When Medicare beneficiaries have paid $6,350 in out-of-pocket costs for prescription medications, they enter the catastrophic coverage phase and must pay 5 percent of the cost of their drugs for the remainder of the year. A recent Federal Reserve study reported that 40 percent of Americans do not even have $400 to cover unexpected expenses, which means millions of Medicare beneficiaries cannot afford this amount of cost-sharing.
Some Medicare recipients who cannot afford their medications turn to independent charitable patient assistance programs to help cover out-of-pocket costs. Organizations such as the Patient Access Network Foundation are busiest in January when deductibles reset. The numbers tell the story.
In January alone, PAN approved over 34,000 grants to patients and received nearly 60,000 calls from patients and providers throughout the nation seeking help. PAN receives far more requests for assistance in January than it does in any other month. This “January effect” is driven not by clinical need but instead by an archaic benefit design that places an often insurmountable financial burden on patients at the beginning of each year.
While they provide a lifeline for seniors and the disabled, PAPs are a Band-Aid on a broken health care system. Ideally, they should not be needed at all.
Much can be done to improve the health care system for all Americans, but the most urgent need is reducing high out-of-pocket costs in the form of deductibles, co-payments and co-insurance that prevent many seriously ill patients from affording critical treatment and medications. There are legislative changes that can be adopted today to provide immediate relief for Medicare Part D beneficiaries, regardless of how the issue of drug prices is eventually resolved.
— First, require Medicare Part D plans to cover essential medication classes on a pre-deductible basis.
— Second, restructure the Medicare Part D Program to place an annual limit on the amount beneficiaries pay out of pocket for their prescription medications.
— Third, spread out-of-pocket costs more evenly throughout the calendar year to increase the affordability of drugs for those on fixed incomes.
Lowering out-of-pocket costs has unanimous support from the White House and both chambers of Congress.
So, let’s get this done this year so that, when next January comes, there is relief for Medicare beneficiaries with chronic diseases and disabilities. Let’s focus on what’s most important to patients and their families — their health — so that they don’t have to struggle with out-of-pocket costs or make difficult trade-offs to obtain their medically necessary therapies.
We need action today.
Dan Klein has served as the president and CEO of the PAN Foundation since 2014, and previously, he served as senior vice president for the Cystic Fibrosis Services specialty pharmacy at the Cystic Fibrosis Foundation.
A. Mark Fendrick is a professor of internal medicine in the University of Michigan School of Medicine and a professor of health management and policy in the School of Public Health, and he conceptualized and coined the term Value-Based Insurance Design (V-BID) and currently directs the V-BID Center at the University of Michigan, the leading advocate for development, implementation and evaluation of innovative health benefit plans.
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