Part D cliff looms for seniors, as program stability could be in jeopardy

For more than a decade, the USA’s Medicare Part D has successfully provided seniors comprehensive prescription drug coverage that meets their needs, while its market-based structure has kept overall program costs far below initial projections.

But the program could work even better by improving affordability and predictability for seniors who are facing high out-of-pocket costs, according to a Pharmaceutical Research and Manufacturers website posting by Juliet Johnson, deputy vice president of public affairs at PhRMA focusing on federal advocacy communications.

The changes made to Part D in the Bipartisan Budget Act (BBA) that passed in February threaten the program’s successful competitive structure. The BBA closed the donut hole early, but it went much further by lowering insurers’ liability to just 5% of costs in the donut hole. This reduction in risk undermines Part D’s market-based structure by reducing plans’ incentive to manage program costs.