FILLING THE PART D DOUGHNUT HOLE by Ron Pollack
(Editor's Note: Ron Pollack is the executive director of Families USA.)
As just about anyone with Medicare Part D prescription drug coverage can tell you, one of the biggest problems with the benefit has been the gap in coverage that's known as the "doughnut hole." Under the original Part D, when your total drug costs (the costs paid by both you and your plan) reached an initial limit ($2,930 in 2012), your coverage would stop completely. Even though you were still paying premiums, you were responsible for paying the next $3,700 in drug costs out of your own pocket until you reached a catastrophic limit and your coverage started again.
Ever since the drug benefit started in 2006, the doughnut hole has never made any sense as a matter of health insurance. Why would your drug coverage stop when you get sicker and your costs go up? Common sense tells us, and studies confirm, that high drug costs lead people to cut back on their prescription drugs. This is bad for their health, and it's bad for the health-care system in the long run if their health deteriorates as a result and they end up needing costlier care down the road.
Happily, the 2010 health care law does something about the doughnut hole. Under the law, the doughnut hole gradually shrinks each year until it disappears completely by 2020. This year (2012), instead of paying for the entire cost of drugs while in the doughnut hole, people with Part D drug coverage are getting a 50 percent discount on name-brand drugs and a 14 percent discount on generics. These discounts will continue to increase over the next few years, until the doughnut hole is completely filled in by 2020.
These improvements have already made a real difference for millions of seniors. About 3.6 million people had help while in the doughnut hole in 2011. According to the agency that runs Medicare, even though we're less than halfway through 2012, already more than 400,000 people with Medicare have entered the doughnut hole and have saved an average of $724 per person. The numbers add up quickly: Since the health care law was enacted in 2010, people with Medicare have saved a total of $3.2 billion in drug costs.
But there is a very real threat that could put a stop to these improvements. The entire health care law is under review by the Supreme Court. The case focuses on parts of the law dealing with obtaining health insurance that are completely unrelated to Medicare prescription drugs. But a key question is what happens to the rest of the law if the court rules against one section. Opponents of the law argue that the whole law needs to be struck down — even those provisions like filling in the doughnut hole that are unquestionably constitutional and have nothing to do with purchasing health insurance.
Most legal experts believe that, even if the court did rule against one section of the law, it should still leave the rest of the law in place, including the improvements to Medicare prescription drug coverage. But nothing is certain, and based on the questions some of the justices asked when the case was argued in March, it seemed that at least a few of them were considering going much further and taking down the whole law. A ruling against the whole law would mean a nasty hit in the wallet the next time millions of seniors go to the pharmacy. We're expecting a decision from the court by the end of June, and we'll all be watching closely.
Update: On June 28, the Supreme Court upheld the health care law.