In recent years, Medicare Part D beneficiaries have experienced a significant rise in out-of-pocket expenses for commonly prescribed brand-name medications. A study from the USC Schaeffer Center for Health Policy & Economics, published in JAMA, reveals that drug plans are increasingly linking patient costs to list prices, leading to substantial financial burdens. The research highlights the shift from fixed copayments to coinsurance, where patients pay a percentage of the drug's list price. This transition has exposed a growing number of beneficiaries to escalating medication costs.

Rapid Increase in Coinsurance Plans Raises Concerns for Medicare Beneficiaries

During the golden autumn of healthcare policy analysis, researchers observed a dramatic shift in how Medicare Part D prescription drug plans handle cost-sharing for preferred brand-name drugs. In 2020, only 9.9% of standalone Part D plans used coinsurance, but this figure skyrocketed to 71.9% by 2024. By contrast, fewer than 5% of Medicare Advantage plans adopted this approach last year. Consequently, beneficiaries enrolled in standalone Part D plans, which represent 43% of the market, face increasing exposure to rising list prices.

The coinsurance amount typically stands at about 25% of a drug's price before any rebates or discounts negotiated by pharmacy benefit managers (PBMs) or health plans are applied. Although rebates and discounts have increased over the years, these savings rarely benefit patients directly. Instead, they often subsidize premiums for others, creating an imbalance in the insurance system. For instance, the blockbuster blood thinner Eliquis saw its average expected out-of-pocket cost more than double for standalone Part D plan beneficiaries, from $46.76 to $102.32, between 2020 and 2024. Meanwhile, Medicare Advantage plan beneficiaries experienced only a slight increase from $44.57 to $46.93.

Other common preferred branded drugs like Trulicity, Xarelto, and Ozempic also witnessed substantial increases in out-of-pocket costs for standalone Part D plan users. These hikes can be particularly jarring for long-term patients who suddenly find themselves paying significantly more for medications they have relied on for years. While the new out-of-pocket cap in Part D may offer some relief over the full year, the initial sticker shock could disrupt medication adherence, potentially leading to worse health outcomes.

Erin Trish, lead author and co-director of the Schaeffer Center, emphasized that this trend is contrary to the intended function of insurance. Beneficiaries are bearing the brunt of artificially inflated list prices, while generating rebates that primarily benefit others. This situation underscores the need for reforms to ensure fairer cost distribution and better support for vulnerable populations.

From a reader's perspective, this report serves as a stark reminder of the complexities within the healthcare system. It highlights the importance of transparency and equitable policies that protect patients from unexpected financial burdens. As policymakers continue to debate reforms, it is crucial to prioritize solutions that safeguard the well-being of all beneficiaries.