The current $35 monthly cap on out-of-pocket insulin costs for Medicare beneficiaries — which was passed by Congress and signed by President Joe Biden last year as part of the Inflation Reduction Act — would have saved insulin users an average of about $500 in 2020 if the cap had been in place that year, according to a new analysis published by the U.S. Department of Health and Human Services.
The Inflation Reduction Act is a landmark law that contains numerous provisions, including many designed to reduce health care costs for Medicare beneficiaries and people who get their health insurance through the federal Marketplace (healthcare.gov) or their state’s health insurance exchange. While the proposed law was originally written to cap monthly insulin costs at $35 under all health insurance plans in the country, the opposition of most Senate Republicans to this provision led to the cap applying only to Medicare beneficiaries due to Senate rules that apply to certain spending bills. Still, diabetes advocacy groups praised the new $35 cap for Medicare beneficiaries, along with the other new drug benefits included in the law. Surveys have shown that rationing insulin due to its cost is a widespread practice, including among Medicare beneficiaries before the new cap went into effect.
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Savings from insulin cost cap
For the latest analysis, researchers at the Department of Health and Human Services used 2020 Medicare claims data to look at how much money insulin users would have saved if the current cap had been in place that year. They found that an estimated 1.5 million people would have benefited from this cap, saving $734 million under Medicare Part D (which covers insulin for most people) and $27 million under Medicare Part B (which covers insulin for insulin pump users), for total out-of-pocket savings of $761 million.
Nationwide, the average out-of-pocket cost of insulin for Medicare beneficiaries in 2020 was about $63 per fill, which typically includes a 30-day supply. About 37% of insulin fills for Medicare beneficiaries cost over $35 per fill, and about 24% of them cost over $70 per fill. Only the 37% of insulin users with a cost of over $35 per fill were included in the analysis — it did not include, for example, people who might have not filled an insulin prescription due to its cost. That means the actual benefit from the $35 cap could have been even greater, allowing some people who rationed their insulin not to do so.
Savings would extend beyond Medicare beneficiaries
The analysis also shows that if Congress were to extend the $35 insulin cost cap to all health insurance plans, many other people with diabetes who aren’t Medicare beneficiaries would stand to benefit. The average out-of-pocket cost of insulin for people with a private insurance plans was also $63 per fill, while for people without health insurance it was $123 per fill. Insulin fills for people with private insurance or no insurance were significantly more likely to require cost-sharing than for Medicare or Medicaid beneficiaries.
The average out-of-pocket savings for Medicare beneficiaries who use insulin would have varied by state in 2020, ranging from $389 in Hawaii to $805 in North Dakota. Insulin users with Medicare in North Dakota, South Dakota, Vermont, Nebraska, and Minnesota would have benefited the most, on average, from a $35 cap in 2020.
The researchers noted that if the new $35 cap leads to more people with diabetes taking their insulin as prescribed, this could lead to future Medicare cost savings due to lower rates of diabetes complications — something that future research should monitor, to get a broader sense of the benefits of the new cost cap.
Want to learn more about saving money on insulin? Read “Insulin Prices: Four Ways to Pay Less” and “Cheaper Insulin: Older Insulins May Be Answer to High Prices.”