Prescription drug coverage is one of 10 essential health benefits required by the Affordable Care Act (ACA). This means that insurance policies must cover these benefits to be ACA certified and to participate in the federally mandated Health Insurance Marketplace, where consumers shop for health coverage online. States expanding their Medicaid programs must also provide these benefits to Medicaid-eligible consumers.
Meanwhile, the ACA also impacts Medicare beneficiaries, as seniors who reach the “donut hole,” or coverage gap in Medicare Part D Prescription Drug Plans (PDPs), will continue to receive discounts and pay an increasingly smaller portion of prescription costs until 2020. As a reminder, Medicare.gov defines the donut hole as the coverage gap that begins after a consumer and her or his drug plan have reached a spending plateau on covered drugs. In 2014, once the Medicare beneficiary and their plan have spent $2,850 on covered drugs (the combined amount plus your deductible), the patient is in the coverage gap and needs to pay for their drug costs out-of pocket until they reach a total of $6,455 in spending.
Together, this adds up to major changes at the pharmacy counter. Here’s a look at how health care reform has an impact on consumers.
By mandating that prescription drugs are one of 10 essential health benefits that insurance plans must offer — among maternity and newborn care, preventative care, hospitalization and mental health — the ACA makes drug coverage a core part of health insurance, and it eliminates insurers’ ability to tack on a prescription drug benefit plan to a health care plan at an additional cost.
The ACA requires insurance plans to cover at least one drug in every category and class in the U.S. Pharmacopeia, the official list of approved medicines. Moreover, patients — and their doctors — can request and gain access to clinically appropriate drugs that aren’t covered.
Plans maintain their own preferred-drug lists, or formularies, and the cost for the same drug can vary significantly between plans, which is especially important to note for consumers with chronic conditions.
Out-of-pocket drug costs also vary between the four levels of insurance coverage — bronze, silver, gold and platinum — available through the Health Insurance Marketplace. Generally, the more expensive the plan, the lower the out-of-pocket drug cost. Ninety-day mail order supplies may also be a more affordable option for some consumers.
Another change is that prescription drug costs are now counted towards out-of-pocket caps on medical expenses, which are an estimated $6,400 for individuals and $12,800 for families.
As a part of preventative care, prescription birth control is now free if generic, and available through a co-pay if brand name.
Some 48 million uninsured adults are also newly eligible for health insurance through Medicaid, and therefore prescription drug coverage. However, as of early 2014, only 25 states and Washington D.C. have committed to expanding their Medicaid rolls, so much uncertainty remains about how many newly eligible people will join the ranks of the insured.
While Medicare isn’t part of the health insurance exchange, seniors with Medicare Part D drug coverage have felt the impact of ACA since 2011, when they began receiving a 50% discount on brand-name medication after they reached the donut hole.
That discount, applied automatically at the pharmacy counter, continues. Over the next six years, seniors will receive additional savings on brand and generic drugs until the coverage gap is closed in 2020. Generic drugs are covered differently than brand names. In 2014, seniors will pay 47.5% of the cost of brand-name drugs and 72% of the cost of generics. Because generics cost far less than brand names, seniors cover a higher percentage for them out of pocket.
The percentage seniors will contribute for all prescriptions will decrease annually until it reaches 25% in 2020.
Since the ACA was enacted in 2010, more than 7.3 million Americans with Medicare who reached the donut hole have collectively saved $8.9 billion on prescription drugs, or $1,209 per person on average, according to the Centers for Medicare & Medicaid Services. The average Medicare-covered patient will save approximately $5,000 from 2010 to 2022, while those with high prescription drug costs will save as much as $18,000.
CVS Caremark is committed to ensuring that customers are able to make informed decisions about their health care and this includes helping them understand their insurance options. Health Insurance Information Centers are now available at more than 7,600 CVS/pharmacy stores and 800 MinuteClinic locations nationwide to help them navigate the complex health care system. Information is also available online at www.cvs.com/insurance.