Capping Medicare Beneficiary Part D Spending at $2,000: Who Would it Help and How Much?

A nursing aid talks with a resident of a nursing home.

A proposed out-of-pocket spending cap in Medicare Part D would protect eligible seniors from recurring high drug payments.



The Issue

Medicare Part D enrollees remain at risk of increasing prescription drug payments year after year. A new analysis shows that a proposal to cap out-of-pocket expenses in Medicare would lower prescription drug prices by an average of $900 for eligible seniors while raising overall Medicare program spending levels by less than 1 percent.

Key Findings

  • A $2,000 cap on prescription drug out-of-pocket costs for Medicare Part D enrollees who do not qualify for cost-sharing protections would save more than 860,000 enrollees an average of $900 annually.

  • The proposal would increase Medicare spending by less than 1 percent.

  • Certain enrollees would benefit substantially from the proposed cap:

    °    40 percent of those who saw out-of-pocket Part D expenses greater than $2,000 annually spent $2,000 to $2,500.

    °    30 percent spent $2,500 to $3,000 

    °    12 percent spent $3,000 to $3,500 

    °    18 percent spent more than $3,500


Researchers determine that a spending cap in Medicare Part D would help protect individuals and their families from withstanding high drug payments year after year and enhance the overall benefit of the Medicare Part D program without substantially raising the program’s costs.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.