Medicare: These 5 States Have Saved the Most From Drug Discounts
Medicare is a vital part of financial planning for senior citizens, covering a huge portion of older Americans' healthcare costs. Over the past decade, prescription drug coverage under Medicare Part D has also played a vital role, with nearly 40 million participants taking advantage of Part D services in the coming year. Yet while the original provisions of Medicare Part D left many seniors having to bear a substantial part of the costs for their prescription drugs, provisions of the Patient Protection and Affordable Care Act, also known as Obamacare, have helped save Medicare participants billions of dollars since taking effect in 2010. In particular, five states have benefited the most from these provisions, saving more than 1.75 million residents a total of almost $1.7 billion just last year alone.
Images courtesy U.S. Mint
Where the savings came from Medicare Part D provides coverage for prescription drug costs to any Medicare recipient who signs up for the program. But it doesn't pay for the entire cost of prescription drugs. The original law establishing Part D created a coverage gap, also known as the "donut hole," in which participants had to pay the entire cost of prescription drugs. In 2015, the donut hole begins for those who spend more than $2,960 on covered drugs. Only after you spend $4,700 in out-of-pocket costs does the donut hole end and Medicare's catastrophic coverage provisions kick in to cover all but the ordinary copayment or coinsurance amounts.
What the Affordable Care Act did was start closing the coverage gap. In 2010, anyone who hit the donut hole received a $250 rebate. The following year, participants started getting discounts on brand-name drugs and further savings on generic drugs. For 2015, those savings will amount to 55% of brand-name drug costs and 35% of the cost of generics.
Nationwide, those provisions have saved 9.4 million Americans more than $15 billion on their drug costs, according to the Department of Health and Human Services. In 2014 alone, 5.1 million participants saved $4.8 billion on prescriptions. Although people across the country benefited from the savings, more than a third of the money saved was concentrated in the five states discussed below.
5. PennsylvaniaPennsylvanians saved a total of almost $282 million in 2014 from the ACA's prescription-drug provisions, with more than 297,000 residents taking advantage of the savings. That brought the total savings under the program to $940 million since 2010. The average savings of $948 last year was second only to New York among these top five states, although many smaller states saw even greater average discounts.
4. FloridaThe state best known for its retiree population predictably appears in the top five, although its $306 million in savings last year was only enough to put it fourth on the list. More than 346,000 residents qualified for discounts in 2014, which actually put Florida past Texas in terms of number of people affected by the legislation. Yet Florida's average discount was just $884, ranking as the worst of these five states. Since 2010, Floridians have saved $979 million under the ACA provisions.
3. TexasTexas finished third with savings of almost $327 million last year from ACA discounts, helping 345,000 residents cut their overall healthcare costs. Over the past five years, Texans have garnered almost $972 million in total savings from the program.
2. New YorkNew Yorkers got the most average benefit from ACA discounts, with 353,000 residents reaping an average of $1,076 from the provisions, totaling up to almost $380 million in 2014. That brings New York's total savings during the five-year period to $1.15 billion.
1. CaliforniaWith its large population, it's no surprise that California led the list in terms of Medicare prescription drug cost savings. Cost reductions of $391 million went to more than 417,000 residents in 2014, amounting to an average of $937 per person. Since 2010, the ACA's discounts have returned more than $1.22 billion to Californians.
Prescription drug coverage has become a much relied-upon part of the Medicare program. As the coverage gap continues to close in future years, participants will see even greater savings from the Affordable Care Act's provisions.
The article Medicare: These 5 States Have Saved the Most From Drug Discounts originally appeared on Fool.com.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.