Approximately 1.5 million Medicare beneficiaries are expected to see savings in response to a provision of the Inflation Reduction Act (IRA), which capped insulin prices at $35 for a month’s supply for Medicare Part D beneficiaries starting January 1, according to an HHS report released Tuesday.
“I think we all could agree that no one should have to skip or ration their insulin because they can’t afford it,” said HHS Secretary Xavier Becerra, during a call with reporters on Tuesday.
Based on claims data from 2020, 1.5 million beneficiaries with diabetes would have saved an average of $500 on their insulin costs that year had the $35 cap gone into effect, Becerra noted. “These are the kinds of savings that will give people a little bit of breathing room to cover household costs or splurge on their grandkids.”
A similar provision is slated to take effect on July 1 for insulin supplied through the Part B program.
If the cost-sharing limitations had been implemented in 2020, estimated savings would have totaled $734 million for Medicare Part D beneficiaries, and $27 million for beneficiaries through Part B plans, said Bisma A. Sayed, PhD, a health economist for the HHS Office of the Assistant Secretary for Planning and Evaluation (ASPE), and colleagues in their report.
The Cost Burden of Insulin
Sayed and colleagues used 2019 survey data for people with Medicare, Medicaid, private insurance, and no insurance to track out-of-pocket spending on insulin. They then estimated the potential effects of the insulin cap provisions of the IRA using 2020 Medicare claims data.
The report includes a state-by-state breakdown and demographic characteristics — gender, race, ethnicity, and age — of those benefiting from the insulin-related provisions.
For context, the average out-of-pocket cost per insulin prescription fill nationally was $58 in 2019, most often for a 30-day supply. For patients with private insurance or Medicare, average out-of-pocket costs were slightly higher, at $63 per fill. Those without insurance paid about $123 per fill on average — more than twice the national average.
Additionally, about 37% of insulin fills for Medicare beneficiaries in both Part B and Part D plans required cost-sharing of more than $35 per fill; however, that excludes the potential costs for patients who didn’t fill their insulin because of its high cost or for other reasons.
When insulin prices are too high, adherence suffers, which can lead to complications including ketoacidosis, kidney disease, amputations, and vision loss, which increase the risks for hospitalization and death, Sayed and colleagues noted.
In their report, they highlighted the three states with the greatest number of Medicare beneficiaries expected to benefit from the insulin cap across both Medicare Part D and Part B programs:
- Texas: 114,000 beneficiaries
- California: 108,000 beneficiaries
- Florida: 90,000 beneficiaries
They also pointed to the states with the highest projected out-of-pocket savings, including:
- Texas: $50,395,627
- Pennsylvania: $43,565,423
- Florida: $42,920,606
Meanwhile, the states projected to have the “highest average annual out-of-pocket savings per individual” included:
- North Dakota: $805
- Iowa: $725
- South Dakota: $725
“Overall, about 1.25 million white beneficiaries, 160,000 Black beneficiaries, 28,000 Latino beneficiaries, 20,000 Asian beneficiaries, and 7,000 American Indian/Alaska Native beneficiaries will benefit from the new provision,” Sayed and team wrote.
As for whether people with Medicare Advantage plans would be helped by the changes, Christen Linke Young, JD, White House Deputy Assistant to the President for Health and Veterans Affairs, explained that most people on insulin purchase it through their pharmacy through the Part D program.
“So, whether you get your Part D benefits through a stand-alone Part D plan alongside traditional Medicare or you’re getting your Part D benefits integrated within a Medicare Advantage plan, when you go to get insulin at the pharmacy, you are getting $35 insulin,” she said.
There are also some Medicare beneficiaries who get their insulin through Part B plans, Linke Young noted, typically those with insulin pumps or those with another “unique situation.”
For these individuals, whether their coverage for Part B comes through Medicare Advantage or a traditional Medicare plan, they will also see the benefits of a $35 insulin cap per month once those provisions take effect in July, she said.
Asked whether the final figure of 1.5 million seniors who are expected to benefit from the insulin-related provisions might in reality reflect the impact of the Part D Senior Savings Model, report co-author Nancy DeLew, MA, MPA, ASPE’s Associate Deputy Assistant Secretary for the Office of Health Policy, said that “there are certainly Medicare beneficiaries who have benefited from that model,” but the analysis measures the effects of the provisions as if they had been implemented in 2020.
Co-author Benjamin D. Sommers, MD, PhD, ASPE’s Deputy Assistant Secretary for Health Policy, noted that he did not think beneficiaries were being “double-counted,” given that some beneficiaries on insulin, “particularly those who qualify for low-income subsidies, have lower co-pays to begin with.”
While there could be some “partial overlap” between beneficiaries seeing savings because of the insulin provisions and those seeing savings as part of the Senior Savings Model, “it would be very unlikely that it’s all of those already being counted here,” he said.
As for what the analysis can predict about future savings from the insulin-related provisions, DeLew said that every year more people from the “Baby Boomer” generation age into Medicare and enrollment is expected to continue to grow.
While she and her co-authors don’t currently have an estimate of how many people could be taking insulin in 2023, “we expect that we will have even more beneficiaries benefiting from this provision and the other provisions in the Inflation Reduction Act solely because of population growth,” she noted.
Sommers said that the analysis did not capture the “thousands or more” people who don’t fill their prescriptions at all or who only fill them every other month because they can’t afford them.
“So, in addition to the financial savings of the 1.5 million here, there are also going to be people who now can afford what they couldn’t before,” he continued. “And so we’ll see them not only getting financial savings, but actually improved access to their medications.”