How the ACA Has Affected Prescription Access and Affordability
Key takeaways:
The Affordable Care Act (ACA) was enacted in 2010 to lower healthcare costs and widen access to healthcare coverage.
One main focus was to improve prescription drug affordability and access without creating barriers to pharmaceutical advancements.
In the decade since it was enacted, the ACA has made great progress towards improving prescription access and cost. It has done this by expanding health coverage and improving drug rebate programs.
The Affordable Care Act (ACA) included specific provisions to improve prescription access and cost. Yet, the results of those provisions have been mixed. More than 10 years after the ACA was enacted, many Americans still struggle with affordability. As many as 3 out of 10 adults do not take their prescriptions as prescribed due to cost. However, the ACA has made many positive improvements that have helped millions of Americans with prescriptions.
Here, we will review how prescription access and affordability have changed since the passage of the ACA, and what needs to change in the future.
Changes to prescription management in the ACA
When developing the ACA, lawmakers were tasked with delivering affordable medications to consumers without restricting the pharmaceutical market or limiting advancements in medicine.
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Instead of addressing the actual cost or cost structure of pharmaceuticals, the ACA aimed to increase access to healthcare plans. So, the overall burden of prescription costs fell on federal programs and insurance companies. The ACA also sought to raise drug rebates to lower costs.
Here are some ways that the ACA changed how prescriptions were accessed and paid for.
Changes to healthcare plans
Before the ACA was enacted, there were less options for uninsured people to access healthcare. Medicare and Medicaid had stricter requirements. If someone did not have employer-based coverage, private insurance plans were often unaffordable. Many people struggled with high medical debt due to denied coverage because of preexisting conditions or ineligibility.
The solution was to expand access to comprehensive health coverage. Medicaid, Medicare, and private marketplace plans were all affected by the new laws.
Medicaid
Medicaid used to be available only to people with certain disabilities, older adults, pregnant women, and children. The ACA offered states the choice to expand Medicaid eligibility to a new pool of qualifying participants. All adults within certain income requirements became eligible for coverage. And they didn’t need to qualify based on disability or medical condition. This led to over 21 million people enrolling in Medicaid since the ACA was passed.
Medicaid also runs the 340B Drug Pricing Program, which requires drug manufacturers to offer a discount to healthcare organizations providing care to Medicaid participants. The ACA added more eligible hospitals and expanded which pharmacies could be used to fill 340B prescriptions.
Medicare
The legislation around Medicare Part D prescription drug coverage addressed a long-standing coverage gap known as “the donut hole.” This gap meant Medicare participants were sometimes paying the full cost of their prescriptions out of pocket.
The ACA successfully closed the donut hole by 2020, due to the following improvements:
Reaching consumer cost-sharing goal of 25% by 2020 from 100% in 2010
Directing checks and discounts to participants until the donut hole closed
Lowering the overall cost of Medicare part D prescription plans
Requiring manufacturers to rebate 50% of brand-name drugs in the Medicare coverage gap
Private marketplace plans
Before the ACA was passed, 9% of private marketplace plans did not offer prescription drug coverage. And patients could be denied coverage due to preexisting conditions.
The ACA sought to improve that by requiring private plans to:
Cover at least one drug per drug class
Consider prescription drug coverage as a required health benefit
Remove preexisting conditions as a barrier to getting private health coverage
Drug rebates
Pharmaceutical manufacturers offer drug rebates to offset the total cost of the drug. They are given directly to payers and allow more affordable options for patients. By expanding drug rebates, the ACA sought to lower total prescription costs.
The ACA included the following changes to drug rebates:
Increased mandatory rebates for Medicaid providers in the 340B program
Rebate of 50% for brand-name drugs offered in Medicare Part D
New tax paid by manufacturers on brand-name prescriptions
Implications of ACA prescription changes
While more people have health and prescription coverage on an individual level, actual prescription spending has nationally risen since the ACA’s inception and has climbed more than tenfold nationwide since 1980.
But, more spending overall does not necessarily mean an increased burden on patients. Rather, it means more people are using these affordable medications to manage their care. Let’s look at the ACA’s impact on patients and payers.
This increased spending on prescription is due to the following factors:
New enrollees in ACA healthcare plans starting new prescriptions
Name-brand patents expiring, making cheaper generics more widely available and increasing incentives for generics over brand-name drugs
Lower overall prices of prescription drugs due to ACA rule changes
Impact on patient
Access to prescriptions greatly rose after the ACA was enacted. Out-of-pocket prescription costs were greatly lowered for new enrollees in expanded Medicaid plans, Medicare, and private marketplace plans. New enrollees benefited from greater access to covered medications. And existing enrollees benefited from cost savings implemented in the legislation.
Access
Medicaid: With a rise in new Medicaid enrollees, a new pool of people gained access to prescription coverage, primary care, and chronic disease management. This caused a total increase in the use of prescription drugs. The 340B program advancements resulted in expanded pharmaceutical services and greater access to healthcare.
Medicare: Medicare recipients have saved over $26 billion since the ACA was enacted. By 2020, the “donut hole” payment gap reached its closing goal. As a result, participants will never pay more than 25% for a brand-name drug. This also goes towards out-of-pocket costs, lowering the total cost burden.
Private plans: By early 2022, over 11 million new enrollees received coverage through subsidized, private marketplace plans. These plans cover people who do not qualify for Medicare or Medicaid.
Affordability
Out-of-pocket drug costs have dropped greatly in recent years. In 1990, patients paid 57% of prescription costs out of pocket. By 2018, that number fell to 15%. This is mostly due to more people having health coverage and increases in what insurers are required to pay, plus incentivizing the use of more affordable generic drug alternatives.
Impact on payer
Between 2009 and 2018, there was a reduction in the average net cost per prescription. This is the price private insurers or the federal government pays after rebates from manufacturers.
Medicare: $57 in 2009 to $50 in 2018
Medicaid: $63 in 2009 to $48 in 2018
To incentivize less expensive generics, the cost of brand-name prescriptions increased:
Medicare: $149 to $353
Medicaid: $147 to $218
The drug rebates built into the ACA greatly benefits payers and saves money by prioritizing generic versions of medications.
Recommendations for the future
The ACA did not institute systemic changes for the actual pricing of prescription medications.
One of the key reasons for this was the fear that it may have prevented the development of new medications. Pharmaceutical companies have continued to develop new, live-saving drugs. But, they are now some of the most expensive medications available. So, the issue of affordability still remains.
Researchers suggest these changes for the future:
Improving access and affordability: Cap out-of-pocket spending for drugs.
Addressing high drug prices: Remove incentive programs that encourage physicians to suggest higher-priced drugs over more affordable ones.
Drug pricing review boards: Analyze cost-effectiveness and determine coverage and reimbursement strategies.
President Biden aimed to address prescription drug affordability in the Build Back Better Act. This part of the plan has yet to pass the Senate. And it will likely be altered in the final form. But, it is helpful to see where prescription legislation can improve.
The original provisions suggested the following changes:
Allow the federal government to negotiate high-cost drugs covered by Medicare.
Offer inflation rebates to limit annual drug price increases.
Place a cap on out-of-pocket spending for Medicare prescription plan enrollees.
Improve cost-sharing for insulin.
Remove enrollee costs for adult vaccines paid for by Medicare.
Reinstate drug rebates removed during the Trump administration.
The bottom line
As prescription medication use and spending continue to rise, maintaining affordability and access is more important than ever. The ACA has shown great success in reimagining how prescriptions are paid for. But more work needs to be done. A future where prescriptions are affordable and accessible for all requires bold new ideas that build off of the ACA’s improvements.
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