HHS: ‘Obamacare’ saved Medicare seniors $4.1 billion in prescription drug costs so far this year

The Affordable Care Act has helped nearly 5.4 million Medicare beneficiaries save more than $4.1 billion in their prescription drug costs during the first seven months of this year, according to updated figures released by the U.S. Department of Health and Human Services. 

The health care reform law – dubbed “Obamacare” by Republicans – reduced over-payments to Medicare-subsidized private health plans and used the cost savings to close the Part D prescription drug coverage gap, known as the “donut hole”.

Seniors who hit the Part D donut hole (once they have exceeded their private plans’ coverage limits for prescription drugs) can now receive a 50% discount on covered brand name drugs as well as discounts on generic drugs. The HHS estimated that seniors on Medicare have saved an average of $768 so far this year as a result of the Affordable Care Act.

“Medicare is stronger thanks to the health care law, saving people money and offering new benefits at no cost to seniors,” said Health and Human Services Secretary Kathleen Sebelius.

In addition, the Medicare cost savings achieved by the Affordable Care Act have helped reduce American seniors’ out-of-pocket costs for preventive care services under their Part B private health plans.

So far, more than 18 million seniors have been able to receive preventive care without co-pays, deductibles, or extra costs, helping to treat illnesses before they deteriorate to more chronic – and costly – conditions.

Read more: House Republicans repeal health care law for the 33rd time  

For example, before the Affordable Care Act Medicare provisions went into effect, seniors under Medicare Part B plans would have to pay as much as $160 out-of-pocket for a colorectal cancer screening. Now, Medicare seniors are able to receive certain cancer screenings, including colorectal cancer, without out-of-pocket costs.

The preventive care services covered under the health care reform law include:

  • Yearly wellness check-ups or physical exams
  • Screenings for cervical, colorectal, prostate, and breast cancers (including mammograms)
  • Diabetes, cholesterol, and heart disease screenings
  • Bone mass tests to detect osteoporosis
  • Flu shots
  • HIV tests

For a complete list of covered preventive health services, please visit the Center for Medicare and Medicaid’s website.


The HHS statistics were released a week after Republican presidential contender Mitt Romney and his running mate, Paul Ryan, began airing ads attacking the Medicare reforms enacted by the Affordable Care Act.

One of the ads, titled “Paid In”, told viewers:

“You paid into Medicare for years. Every paycheck. Now when you need it, Obama has cut $716 billion from Medicare. Why? To pay for Obamacare. So now the money you paid for your guarantee health care is going to a massive new government program that’s not for you. The Romney-Ryan plan protects Medicare benefits for today’s seniors and strengthens the plan for the next generation.”

Rep. Chris Van Hollen (D-Md.), Ranking Member of the House Budget Committee, refuted Romney and Ryan’s claims that the GOP’s plan would protect benefits for today’s seniors.

Speaking at the Politics and Eggs event in New Hampshire last week, Van Hollen pointed out that the Romney-Ryan plan will get rid of the prescription drug and preventive care savings made possible by Obamacare.

“[The Republican plan] re-opens the prescription drug doughnut hole. So if you’re a senior on Medicare with high prescription drug costs, you are going to be paying thousands of dollars more over the next 10 years – thousands dollars more than you would today,” said Van Hollen. “And if you use a lot of preventive health care services – and we hope people will because that will save money long-term – it will cost you more under the Republican plan now, immediately, not 10 years from now.”

Furthermore, the $716 billion figure cited by the Romney-Ryan ad were the result of eliminating over-payments to private insurers.

“It turns out that the Medicare program was compensating private insurance plans – Medicare Advantage plans – on average 114% of the [traditional fee for service plans,” said Van Hollen. “In other words, these private plans that were originally established to try and reduce costs in Medicare actually increased costs in Medicare.”

In fact, the 2012 Medicare Trustees’ report found that private insurance plans under Medicare Part B and Part D are “increasing rapidly”.

The annual cost increase for Medicare Part B, also known as Medicare Advantage or supplemental private insurance plans that cover outpatient (non-hospital) medical care, averaged about 5.9% in the last 5 years. The annual cost increase for Medicare Part D, or supplemental private insurance plans that cover prescription drugs, averaged about 7.2% in the last 5 years.

The Medicare Trustees projected that Part D costs will increase by about 8.8% every year between now and 2021. And if Congress decides to override the 31% Medicare “doc fix” reimbursement reduction (which it has every year since 2003), then Part B costs are projected to increase by 7.6% each year between now and 2021.

In a nutshell, without the Medicare reforms enacted by the Affordable Care Act, Part B and Part D cost increases will significantly outpace U.S. economic growth – projected to be about 5% annually – over the next decade.

“There’s no doubt that now and over the longer term we need to deal with the issues of rising health care costs,” said Van Hollen. “Under the President’s approach, as we began in the Affordable Care Act – what we said is we need to move the health care system, especially Medicare, away from a fee-for-service system that rewards the volume of care and the quantity of care over the value of care and the quality of care. We need to move the incentive structure away from that to reduce costs in the health care system…So what’s the Romney-Ryan approach? It’s not to reduce overall health care costs. It’s to simply transfer those rising health care costs from seniors on Medicare – from the Medicare program to seniors on Medicare, which is why the Congressional Budget Office said that under the earlier version of the Ryan plan, 10 years from now seniors on Medicare will pay $6,000 more for the same set of benefits.”

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4 Comments on “HHS: ‘Obamacare’ saved Medicare seniors $4.1 billion in prescription drug costs so far this year

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