Latest version of Democrats’ $1.75 trillion budget bill includes improvements to Medicare’s coverage

Improvements to Medicare’s coverage could be on the horizon for the health insurance program’s 63.3 million beneficiaries.

Under the latest version of congressional Democrats’ $1.75 trillion spending bill, the federal government would be permitted to negotiate the price of certain drugs with pharmaceutical companies, a move expected to result in lower costs. Additionally, beneficiaries’ out-of-pocket spending for Medicare’s drug benefit (Part D) would be capped at $2,000 per year and the cost for some insulin would be limited to $35 per month.

“The proposal that would probably have the most direct effect on beneficiaries is the cap on out-of-pocket spending, particularly for people who take expensive drugs,” said Tricia Neuman, executive director of the Medicare policy program at the Kaiser Family Foundation.

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These new proposals are in addition to the bill’s existing provision to cover hearing services under Medicare. Earlier versions of the measure included dental and vision coverage but were scrapped.

The latest Medicare-related provisions are the result of a compromise struck among Democrats, who already have cut the total price tag of the spending plan to $1.75 trillion from $3.5 trillion. It’s uncertain whether this iteration of the bill will be what’s ultimately voted on in the House and Senate, nor is it clear when that may happen. It’s expected to get no Republican support.

For some Medicare beneficiaries  — the majority of whom are age 65 or older  — limiting out-of-pocket drug spending could mean saving thousands of dollars per year because there currently is no cap. Roughly 1.2 million enrollees spent more than $2,000 on drugs delivered through Part D in 2019, according to research from Neuman’s group. 

“In any given year, it’s a relatively small number of people who have high drug expenditures, but those who do tend to have serious medical conditions that require very pricey drugs,” Neuman said. 

Meanwhile, price negotiations with pharmaceutical companies would start in 2025 with up to 10 drugs that year, she said. That number would rise to 20 in 2028.

Additionally, the Democrats’ bill also would penalize drug companies whose price increases exceed the rate of inflation. This provision would apply to both Medicare and the broader health insurance market.