Print Friendly and PDFPrinter Friendly Version

Blog
Friday, May 27, 2011

Seniors Breathing a Sigh of Relief

Eileen Falk

Staff Writer

Hundreds of thousands of older Americans breathed a sigh of relief this year, and millions more will in the next few years. The “doughnut hole,” a gap in Medicare coverage of prescription drugs, has caused so many older Americans pain. But now, it is finally closing, thanks to health reform and the Affordable Care Act.

What is the doughnut hole anyway? In the Medicare Part D program, which covers prescription drugs, recipients pay a deductible and then 25% for the cost of their prescriptions until their total costs reach $2,840 for the calendar year (this payment structure is typical, but some plans charge flat copayments instead of a deductible and 25%). Then, recipients enter the doughnut hole, where until this year they had to pay 100 percent of the cost of drugs, even though they are already paying premiums, until their total costs reach $6,484. After that, recipients pay a very small amount of their costs and Medicare pays the rest. Before the passage of the Affordable Care Act, many Medicare beneficiaries ended up stuck in the doughnut hole, paying thousands just to get the medications that they need.

But thanks to the passage of health care reform, seniors in the doughnut hole have already saved hundreds of thousands of dollars. Last year, Medicare sent out $250 rebate checks to seniors to help with the cost of prescription drugs. This year, Medicare Part D recipients in the doughnut hole pay 50% less for brand-name drugs and get other discounts on generics. By 2020, the coverage gap will close, and seniors will only pay 25% of all prescription drug costs until they reach the yearly out-of-pocket spending limit.

According to Jonathan Blum, deputy administrator and director of the Center for Medicare & Medicaid, and Kathleen Sebelius, secretary of Health and Human Services, Medicare beneficiaries in the doughnut hole have already saved $166 million on prescription drugs, with 271,000 people saving an average $613. And savings per person will only go up as the coverage gap closes even more.

What’s more, the majority of the benefits from closing the doughnut hole are being felt by seniors later in life, most of who are receiving medications for serious medical conditions.

And more great news is that closing the doughnut hole is only a small part of how the Affordable Care Act helps seniors and families. Seniors can now receive annual wellness visits with their doctors and preventive care at no cost, keeping them healthier and saving everyone money. The bad news is that threats to the Affordable Care Act may shift health care costs to seniors who simply cannot afford additional health expenses later in life. The House Republican budget, for example, would re-open the doughnut hole, and then add an additional $6,400 in out-of-pocket yearly medical expenses for an average 65-year-old beneficiary by 2022.

Right now, we are on track to close the coverage gap, protect our seniors, and ensure that all Americans, including the elderly and disabled, have access to the quality care and prescriptions they need. Hundreds of thousands have already felt the benefits of health care reform — let's make sure that millions more do for years to come.