June 2, 2026 | Erin Bluvas, bluvase@sc.edu
A recent study led by health services policy and management assistant professor David Anderson has examined changes in Medicare Part D plans (both Medicare Advantage plans with drug coverage and standalone prescription drug plans) to assess how insurers may have changed various aspects of the plans in response to the 2022 Inflation Reduction Act. Published in Health Affairs, the researchers findings showed that insurers reacted primarily by lowering premiums and increasing deductibles.
“Medicare is a complex and fragmented system where parts of the plan’s health benefits can be administered by the federal government and others – like the voluntary Part D prescription benefit – involve a multifaceted interplay of entities including private insurers and pharmacy networks,” Anderson says. “After previous policy changes, we’ve seen insurers react in three principal ways: leave markets, increase premiums, or decrease plan generosity. With this study, we wanted to examine insurers’ responses to the 2022 Inflation Reduction Act in comparison to the trends we observed in the years leading up to its implementation in 2025.”
The Inflation Reduction Act made two major changes related to Medicare Part D. First, it put a $2,000 cap on out-of-pocket drug costs – a significant decrease from the $3,800 cap in 2024 and the unlimited beneficiary liability that was in effect in 2023 and in prior years. The second change redistributed the remaining costs after the $2,000 out-of-pocket maximum was met. Insurers’ responsibility increased from 20% to 60%, reducing government spending from 80% to 20% with drug manufacturers covering the remaining 20% of catastrophic expenses.
Anderson and his team looked at the impact of these changes by examining changes in premiums, deductibles, drug coverage, restrictions on drugs (e.g., prior authorization), and pharmacy networks. In other words, what actions did insurance companies take to manage the increased financial risk they assumed as a result of this new policy?
Their analysis revealed that premiums went down slightly, leading to lower-than-expected monthly costs and relatively affordable upfront expenses. The researchers predicted that deductibles would go up, and they did – even more than they expected, which meant higher out-of-pocket costs before coverage kicked in.
Drug coverage became slightly more limited – meaning that some cheaper or preferred drugs may be no longer available. Changes to restrictions and pharmacy networks were not particularly notable, and finally, the number of plans available did shrink – indicating that some insurers elected to leave the marketplace.
“By comparing the first year of available data to what things would have looked like without the Inflation Reduction Act, we found that insurers appear to be rebalancing their plans by shifting beneficiary costs from monthly payments to upfront payments,” Anderson says. “We expected more significant alternations to plan designs such as changes that would help them avoid insuring individuals with expensive drug needs, but we have not seen that shift so far. As the policy environment evolves, insurers may respond by changing strategies, so it’s important to continue monitoring the Medicare Plan D market to ensure that beneficiaries continue to experience relief from high prescription drug costs.”