Christopher L. Cai, MD

After the Inflation Reduction Act (IRA), Medicare Part D plans increased deductibles and relied more heavily on coinsurance for brand-name drugs. For the most common medications, average monthly out-of-pocket costs in Medicare Advantage plans ranged from $46 to $55 between 2019 and 2024 and then increased to $73 in 2025. In standalone plans, mean monthly costs increased from $62 to $108 from 2019 to 2025. While the IRA capped annual out-of-pocket spending at $2,000, these plan design changes may result in higher costs for beneficiaries who do not reach the cap, suggesting a need for further policy action.

Following changes in Medicare Part D plan design under the Inflation Reduction Act, 7.5% of beneficiaries (2.9 million people) lost their Part D insurer in 2024, a sharp rise from prior years, with higher insurer exit rates among standalone and enhanced plans. These findings suggest a need for additional policies to ensure adequate competition and affordability in the Part D marketplace.

Under the CMS High-Value Drug List Model, a voluntary model under which Medicare Part D plans cap patient out-of-pocket costs for 150 generic drugs at $2 per month, an estimated 4 in 10 Medicare beneficiaries would experience modest savings under this model, with an annual savings of $11 per person.