New $2,000 Medicare Part D Cap Could Reduce Out-of-Pocket Drug Costs for Over One Million Beneficiaries Beginning Next Year, Including Tens of Thousands of Beneficiaries in Most States 

A KFF analysis shows that a new out-of-pocket spending cap in Medicare Part D could translate into savings for well over 1 million beneficiaries when it takes effect next year, including more than 100,000 people each in California, Florida and Texas, based on analyses of drug spending in 2021.

The $2,000 cap, part of the Inflation Reduction Act of 2022, will lead to thousands of dollars in savings for Medicare patients who take high-cost drugs for cancer, rheumatoid arthritis, and other serious conditions. This new limit follows the elimination this year of a longstanding requirement that Part D enrollees pay 5% of their drug costs out-of-pocket after their drug expenditures reach a certain threshold. 

Based on KFF’s review of Part D drug claims data, if the cap been in place in 2021, 1.5 million Medicare beneficiaries would have benefited because their out-of-pocket costs for prescription drugs exceeded $2,000. Of the total 1.5 million, about 200,000 Medicare beneficiaries spent $5,000 or more for their prescriptions that year, while another 300,000 expended between $3,000 and $5,000. The rest spent between $2,000 and $3,000. 

Moreover, the number of people who will see savings from the cap will rise over a longer period of time. A total of 5 million Part D enrollees had out-of-pocket drug costs of $2,000 or more in at least one year during the 10-year period ending in 2021, for instance.

In most states, tens of thousands of Medicare beneficiaries could save money from the new cap next year. In six states — New York, Pennsylvania, Ohio, Illinois, North Carolina, and New Jersey — between 50,000 and 82,000 beneficiaries spent more than $2,000 out-of-pocket for prescription drugs in 2021. The numbers were higher in California, Florida, and Texas, where more than 100,000 Part D enrollees exceeded the threshold that year.