Biden-Harris Administration’s Inflation Reduction Act Saves Medicare Enrollees Nearly $1 Billion in Just the First Half of 2024

New findings show that in just the first half of 2024, nearly 1.5 million people hit the new cap on out-of-pocket costs created by the Inflation Reduction Act, saving nearly $1 billion

Today , the Department of Health and Human Services (HHS), through the Office of Assistant Secretary for Planning and Evaluation (ASPE), released new data showing that nearly 1.5 million people with Medicare Part D saved nearly  $1 billion in out-of-pocket prescription drugs costs in the first half of 2024 because of the Biden-Harris Administration’s Inflation Reduction Act. Thanks to the Inflation Reduction Act, some people with high drug costs have their out-of-pocket drug costs capped at around $3,500 in 2024. Next year that cap lowers to $2,000 for everyone with Medicare Part D. The report shows that if the $2,000 cap had been in effect this year, 4.6 million enrollees would have hit the cap by June 30 and would not have to pay any more out-of-pocket costs for the rest of the year.

“Nearly a billion dollars – that's how much people with Medicare saved in just the first half of this year because of President Biden’s and Vice President Harris’s lower cost prescription drug law,” said HHS Secretary Xavier Becerra. “The Biden-Harris Administration promised they would strengthen Medicare and deliver savings for the American people, and this new data shows we’re delivering on that promise.”

“By capping out-of-pocket costs for seniors on Medicare Part D, President Biden and Vice President Harris have saved 1.5 million seniors nearly $1 billion in the first half of this year alone,” said White House Domestic Policy Advisor Neera Tanden. “Starting next year, with a new $2,000 cap, we’re expected to save 19 million seniors, and others on Medicare, an additional $7.4 billion in out-of-pocket costs. That’s real change, delivered. Today’s announcement once again illustrates President Biden and Vice President Harris’ unwavering commitment to lowering drug costs for seniors and all Americans. While Republicans continue to try to repeal the Inflation Reduction Act and thereby raise prescription drug costs for all seniors, the President and Vice President will never stop fighting to ensure that no senior has to choose between life-saving prescriptions, or any other essentials, ever again.”

Prior to the Inflation Reduction Act, there was no limit to the amount of out-of-pocket drug costs Medicare enrollees might pay for their medication. Out-of-pocket costs for people with Medicare who do not qualify for the low-income subsidy program and need some of the most expensive drugs could total $60,000 per year or more. The Biden-Harris Administration implemented the first ever cap on out-of-pocket drug costs in the program’s history on January 1 of this year. Today’s initial findings shed light on who has benefitted from this cap as of the first half of the year, and it is expected that additional individuals will benefit over the remainder of 2024. Key findings include:

• Nearly 1.5 million Part D enrollees hit the cap by June 30, 2024 and will have no out-of-pocket costs for the remainder of the year.
• More than 500,000 people with Medicare Part D who do not qualify for financial subsidies based on income saved a total of $979 million, with average savings of $1,802 per enrollee for the first half of 2024 – with additional savings expected over the remainder of 2024.
• California, Florida, New York, and Texas had the highest number of people hitting the cap by midyear among all states. A full state-by-state break down can be found in the report’s appendix and on LowerDrugCosts.gov.
• Younger enrollees, American Indian and Alaska Natives, and African Americans hit the cap at higher rates compared to other enrollees.
• People who need cancer drugs had particularly high costs in the first half of the year.
• If the $2,000 cap, which will go into effect next year, had been in effect this year, about 4.6 million people would have hit the cap by June 30.

The out-of-pocket drug cap is a major benefit of the Biden-Harris lower cost prescription drug law, but it is not the only provision lowering drug costs for people with Medicare. The Administration has lowered out-of-pocket costs on Medicare Part B drugs each quarter    thanks to the law’s Inflation Rebate program, which penalizes drug companies for raising their prices faster than inflation, incentivizing them to keep their prices low. Additionally, the law caps the cost of insulin at $35 per month for covered products, and makes recommended vaccines, like shingles and RSV, free to everyone with Medicare Part D, an especially important benefit as we enter respiratory virus season.

The lower cost prescription drug law also allows Medicare, for the first time ever, to negotiate directly with drug companies to lower the prices of some of the most expensive and most commonly used prescription drugs. In August, the Administration announced the completion of the first round of the negotiation program, resulting in new, lower prices for all 10 of the selected drugs. Beginning in 2026, lower prices ranging from 38 percent to 79 percent off of list prices will take effect for these drugs.

And, the Inflation Reduction Act locks in savings on health insurance premiums that are saving millions of Americans hundreds of dollars per year on health insurance. These cost-saving measures have helped contribute to record low uninsured rates under the Biden-Harris Administration.

To view the full ASPE issue brief, “Medicare Part D Enrollees Reaching the Out-of-Pocket Limit by June 2024” visit: https://aspe.hhs.gov/reports/medicare-part-d-oop-cap

For more information about how the Inflation Reduction Act is lowering prescription drug costs for people with Medicare, visit LowerDrugCosts.gov and in Spanish, MedicamientosBajoPrecio.gov.