The divide is the result of decisions made by the last two administrations. In 2022, President Joe Biden signed the Inflation Reduction Act<\/a>, which for the first time gave Medicare the authority to negotiate prices on some of its most expensive prescription drugs. And in July, President Donald Trump signed the \u201cbig, beautiful bill,\u201d which slashed funding for Medicaid and didn\u2019t extend ACA subsidies. <\/p>\n \u201cIf you\u2019re on Medicare, there\u2019s some good news,\u201d said Larry Levitt, executive vice president for health policy at KFF, a nonpartisan research group. \u201cIf you\u2019re on the ACA or Medicaid, it may be bad news ahead for you.\u201d<\/p>\n Medicare drug costs<\/p>\n Starting Jan. 1, the first negotiated drug prices will go into effect for people with Medicare. These prices will apply to the 10 costliest drugs in the program, including the blood thinners Eliquis and Xarelto and the diabetes drugs Jardiance and Januvia. The drugs are used by nearly 9 million older adults. <\/p>\n Out-of-pocket costs for the negotiated drugs are estimated to fall next year by more than 50%, on average, according to a report published this month by AARP<\/a>; seven of the drugs will cost less than $100 per month. A separate estimate<\/a> from the Centers for Medicare & Medicaid Services projects enrollees will save $1.5 billion in out-of-pocket costs next year. <\/p>\n The Inflation Reduction Act also capped annual out-of-pocket prescription drug spending for Medicare enrollees at $2,000 this year, a limit that will rise to $2,100 in 2026. And in 2023, out-of-pocket insulin costs were capped at $35 a month.<\/p>\n The IRA \u201cis truly a historic win for millions of seniors,\u201d Leigh Purvis, the prescription drug policy principal at the AARP Public Policy Institute, said on a recent call with reporters.<\/p>\n Tom Howie, of Flint, Michigan, said the changes have already had a big impact. <\/p>\n The 81-year-old has a long history of heart disease, including multiple heart attacks that led to quadruple bypass surgery in 1997. <\/p>\n In past years, he spent as much as $8,000 out of pocket on prescriptions before reaching Medicare\u2019s so-called catastrophic threshold, which he typically hit around mid-summer. This year, he reached the $2,000 cap by May. <\/p>\n Howie, who lives on a fixed income, currently pays around $121 for a three month supply of Eliquis, one of the drugs he needs for his heart. He hopes that copay will fall further in 2026. <\/p>\n \u201cIt\u2019s a big difference,\u201d he said. \u201cI just get my Social Security, basically, and then I have some money from my 401(k).\u201d<\/p>\n To be sure, the Inflation Reduction Act hasn\u2019t been all upside. It\u2019s also brought some unexpected drawbacks, including higher list prices for new medications, said Richard Frank, a senior fellow in economic studies and director of the center on health policy at \u200b\u200bthe Brookings Institution, a nonpartisan think tank. <\/p>\n One provision in the law penalizes companies for raising prices too sharply from year to year.<\/p>\n As a result, Frank said, drugmakers are increasingly setting prices higher from the outset.<\/p>\n A report published in October by the nonprofit research group the Institute for Clinical and Economic Review<\/a> found that the average net launch price for 154 new drugs increased 51% over three years, 2022 to 2024, after accounting for inflation and discounts. The drugs on the list included Leqembi, which is used to treat early Alzheimer\u2019s disease, and Casgevy, a gene therapy for sickle cell disease.<\/p>\n \u201cI don\u2019t see any reason to believe that\u2019s not going to at least continue for a bit, until people figure out some sort of policy moves to address that,\u201d Frank said. <\/p>\n Uncertainty for Obamacare and Medicaid<\/p>\n Moves by the Trump administration and Republican lawmakers have brought uncertainty to health care costs.<\/p>\n Enhanced ACA subsidies that helped keep premiums affordable are expiring after Republicans in Congress declined to extend them. Some people could pay up to 114% more, on average, in premiums when combined with rate increases by insurers next year, according to an analysis by KFF, <\/a>a health care research group. <\/p>\n Already, early enrollment data<\/a> provided by state health officials show that more people appear to be walking away from ACA coverage or switching to cheaper plans for 2026 compared to this time last year. <\/p>\n Changes to Medicaid funding approved under Trump\u2019s \u201cOne Big Beautiful Bill,\u201d including the end of a financial incentive for states to expand Medicaid, are set to take effect in January. That means that in the 10 states that haven\u2019t expanded Medicaid, low income adults will remain in a \u201ccoverage gap,\u201d Levitt said, meaning they make too little to pay for ACA coverage but aren\u2019t eligible for Medicaid.<\/p>\n More sweeping Medicaid changes, such as work requirements, are scheduled to go into effect in 2027.<\/p>\n \u201cThat\u2019s going to be one of the biggest changes we\u2019re going to see,\u201d said Stacie Dusetzina, a health policy professor at Vanderbilt University in Nashville, Tennessee. \u201cMore and more people won\u2019t have any access to care, and that will theoretically lead to more uncompensated care for hospitals and doctors and more medical debt for people if they actually need to go and get care.\u201d<\/p>\n Pharma deals <\/p>\n Still, it\u2019s possible that people who aren\u2019t on Medicare could see drug costs go down, driven by efforts from the Trump administration.<\/p>\n Trump has pushed to align the cost of prescription drugs in the U.S. with the lowest prices in other wealthy countries, signing an executive order in May directing federal officials to implement the \u201cmost favored nation\u201d pricing model. Since then, the administration has struck deals with 14 pharmaceutical companies<\/a>, which have offered a combination of lower prices \u2014 through direct-to-consumer offers and charging the federal government less for certain drugs \u2014 in exchange for tariff relief. <\/p>\n![\"Tom](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/12\/251223-tom-howie-vl-148p-94d546.jpg\")
Tom Howie said the changes in the Inflation Reduction Act have already made a difference in his health care spending.Courtesy Patricia Howie<\/p>\n