Medicare drug plans: ACA, don’t mess with success

Provisions throughout the Affordable Care Act (ACA) will hurt seniors, says Devon Herrick, a senior fellow at the National Center for Policy Analysis.


Older Americans are about to be hit with a series of new laws and regulations that will seriously impact their quality of, and access to, care. The Medicare Modernization Act (MMA) of 2003 provides drug benefits and employer retiree drug plan subsidies to nearly 39 million Medicare beneficiaries. Of these, nearly 36 million are enrolled in a program known as Medicare Part D.1 [See Figure I.]

$716 billion has been cut from Medicare over the next 10 years in order to fund the ACA.

Physicians are facing a 25 percent fee reduction for treating Medicare enrollees.

The Independent Payment Advisory Board will have the power to reduce Medicare spending, regardless of the adverse impact on doctors who treat those enrolled in Medicare.

Medicare Advantage (MA) plans cover 25 percent of seniors and add $825 in benefits to enrollees each year. But the ACA plans to cut funding for these plans.

On top of this, the Centers for Medicare and Medicaid Services (CMS) plans to do away with preferred pharmacy networks (arrangements between drug companies and pharmacy networks that promise exclusive business in exchange for lower drug costs) in Medicare Part D plans.

This will only raise the cost of drugs and restrict access to them for many. Of the 39 million Americans on Medicare, 36 million are enrolled in Medicare Part D plans.

Currently, pharmacy networks bid to offer their drugs at low cost and the winning bidders agree to exclusive arrangements with drug plans. The CMS proposal would not allow drug plans to exclude the pharmacy networks that do not offer the lowest prices; rather, it would allow all of those networks to participate in the drug plan on the same terms as the winning bidder.

This leaves no incentive for pharmacy networks to offer low costs, as they are assured the ability to participate in a drug plan regardless. Drug plans would lose all bargaining power, and pharmacies will only be incentivized to bid higher.

All told, nearly 14 million seniors with Medicare Part D will lose their drug plans if preferred networks are banned for 2015.

Source: Devon M. Herrick, “Medicare Drug Plans: Don’t Mess with Success,” National Center for Policy Analysis.


  1. follow this with the 96 hour rule story…. more “rationing” you don’t need a death panel when you can’t get service.

  2. BTW – you wait in that line because there is no one else to do that work – there is no choice or competition to keep the service good – so shut up and get in line….. your and my government at work for you and me.

  3. Medicare plans for DME – went to a bid system that was dismally flawed – resulting in unsustainable pricing – with cuts of 46% and greater – “beneficiaries” (that’s the elderly you) are now having problems getting services from the few vendors that remain on this system to provide the services. Multiple layers of rules and oversights said to be ‘protection against fraud’ have in reality implemented “rationing of services” to the point that the bid ‘winners’ don’t want to do the services for the process is now costing more than the job pays. The ‘red tape’ and ‘audits’ are driving businesses away – the customer (beneficiary) are seeking ‘the old services’ but can’t get them anymore…. oh yeah they said you can keep what you have… but that was a lie – that quality would improve .. but that was a lie… that rationing would not occur but that was a lie.. its a tax – and for this tax and loss of freedom you get very little in return.
    It’s quite annoying to me that I was forced to pay into this broke spent out system all my working life – to now near the time I’m supposed to use it – it’s become buying the low bid junk with the worst possible service ? that is affordable – and I’m told like it or else… and I can’t even just get reimbursed the new rate for an item and pay the difference myself because they’ve made that illegal – (that used to be called an unassigned claim – you could buy what “you wanted” Medicare would pay what it pays for a similar product and you pay the difference yourself) so unless you disenfranchise yourself from Medicare and pay the 100% to get what you want – you capitulate and take what your getting – and the first thing you getting is the back of the long line with a number… see ya later…….. how much later? …… till your dead later?

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