Retirees in Arizona struggle to divide monthly social security payments of $1,667 between rent, food and healthcare bills. Provisions in the recently passed Inflation Reduction Act seek to ease some of that budget strain by introducing caps on rapidly rising Medicare costs.
“In the past year, Medicare went from $143 a month to $178. You look at most Arizonans who rely only on social security to live on… When you have that increase in Medicare — just that $30 or $40 — that’s devastating to them,” Dora Vasquez, executive Director of the Arizona Alliance for Retired Americans, said at a roundtable discussion about the bill’s provisions that help seniors.
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One way the Inflation Reduction Act addresses that const increase is through an extension of the subsidies from the American Rescue Plan that were due to end later this year. The effect is that as many as 200,000 Arizonans will save an annual average of $830 on their health care premiums, according to a White House estimate. Among those who benefit the most from this extension are retirees with no employment insurance.
Medicare-specific provisions help lower costs for retirees with low or fixed incomes. Starting in 2024, premiums for Medicare Part D, which covers prescription drugs, won’t rise more than 6% every year. The IRA also expands income eligibility for the Extra Help program that pays most or all out-of-pocket prescription costs for enrollees.
For retiree Vic Peterson, the most pressing concern is the increasingly high cost of the medications themselves. Nine out of ten adults 65 and older report taking prescription medicine.
“So many people have suffered over the years — seniors especially — to try to make a decision on whether to pay for medication or pay for food or rent,” he said.
Under the IRA, drug companies can’t increase prices more than inflation, or else they must pay the difference of all affected Medicare sales back to the government. And an out-of-pocket pay limit of $2,000 a year for Medicare Part D enrollees will be implemented in 2025.
The decision to allow Medicare to negotiate prices with drug companies is especially heartening for Peterson, a veteran, who said it should have come earlier, given that the same ability was afforded previously to Veterans Administration health care providers.
“It’s crazy that one agency can negotiate, when another can’t,” he said.
Starting with 10 drugs next year, Medicare will begin negotiating prices, adding more drugs to the bargaining list over time. These will be chosen from a list of 100 that the Department of Health and Human Services compiles, with an eye towards those that Medicare spends the most on. Drugs which may currently be eligible for negotiation include some used in the treatment of diabetes, cancer and arthritis.
Besides allowing negotiations to drive prescription drug costs down, the IRA caps insulin copays at $35 for Medicare enrollees. As many as 63,000 Arizonans with Medicare used insulin in 2020.
There are more than 1 million seniors enrolled in Medicare in Arizona. The Inflation Reduction Act’s help in lowering health care costs for them was much-needed, said Deanna Mireau. She oversees 80 mobile home parks for the Arizona Association of Mobile Home and Manufactured Home Owners, a non-profit home rights organization, and the majority of the people she works with are seniors. A common concern she encounters when speaking with seniors worried about making rent is the drain that rising prescription drugs has on their budgets — budgets that often don’t have much room to maneuver.
“The question is: am I going to outlive my retirement money? That’s the big question for seniors,” she said.