Don’t Forget the “Doughnut Hole”

In a generally interesting post at Ten Miles Square on the relative value and great popularity of Medicare, Aaron Carroll offers an important reminder about one recent improvement in both the value and popularity of the program:

It turns out that Medicare has been looking better recently. Why? Because the prescription drug coverage has improved immensely since they started closing the “doughnut hole“. What did that, you might ask. Why the Affordable Care Act, of course.

The “doughnut hole,” as you may recall, was a budget-driven anomaly in the original Medicare Rx Drug benefit whereby coverage ceased when an individual’s costs exceeded a certain amount, and then resumed when they reached a much higher amount. ACA offered beneficiaries a one-time $250 rebate to help cover the “hole” in 2010, and then required pharmaceutical companies to offer discounts on drugs that would otherwise boost out-of-pocket costs for prescriptions that fell into the “hole.”

A new HHS report indicates that 3.6 million Medicare enrollees saved a total of $2.1 billion in 2011 thanks to these ACA provisions. And since the discounts are phased in slowly between 2010 and 2020, the savings will only increase in the future.

If ACA is overturned by the Supreme Court, or is killed by a future Republican-controlled Congress, this very tangible benefit will go away, too. That’s worth remembering, particularly if you are talking to a senior who’s been besieged with “death panel” propaganda about the supposed threat ACA poses to Medicare benefits.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.