More than 750,000 Medicare beneficiaries have so far received relief from the so-called prescription drug "donut hole" as a result of President Obama's new health reform law, the Department of Health and Human Services announced this week. In addition to regular Medicare drug coverage, these Medicare recipients have received checks for $250 to help cover the cost of prescriptions.
The Bush administration and Republican-controlled Congress created the" donut hole" with their 2003 Medicare privatization law. Essentially they created a "drug benefit" that actually forced Medicare beneficiaries to pay hundreds, even thousands more each year for prescription drugs.
Because of the Republican-authored law, Medicare beneficiaries pay 25 percent of the cost of their prescription drugs. Medicare covers the rest up to about $2,800 annually. After that amount the enrollee pays the full cost of their drugs until the price tag reaches close to $5,000. This gap in coverage is known as the "donut hole."
Government estimates show that about 25 percent of Medicare enrollees reach the "donut hole" each year.
“High prescription drugs costs are a problem for many seniors and other Medicare enrollees with limited incomes,” said Health and Human Services Secretary Kathleen Sebelius. “These checks are an important first step in helping them afford the medications they need – and are evidence of how Americans are already seeing the very real benefits of the Affordable Care Act."
Sebelius also touted health reform's projected positive impact on the overall financial soundness of Medicare. "From strengthening the long-term future of Medicare as evidenced by the recent Medicare Trustees report, to saving seniors and the disabled money on everything from prescription drug costs to preventive services," she pointed out, "the Affordable Care Act is helping to preserve and protect Medicare.”
In addition to this year's $250 relief check, next year, as a result of health reform, beneficiaries will receive a 50 percent discount on brand name drugs in the "donut hole" and generic drug prices will also fall substantially.
In 2013, drug prices will fall faster. By 2020, the "donut hole" will be closed and beneficiaries will pay only 25 percent of the cost of their drugs, as now mandated under Medicare.
Critics of the Republican-authored Medicare privatization law also noted that it was intended to shift billions in federal tax dollars to private insurance companies, force low-income seniors to pay more out-of-pocket expenses, and create long-term financial problems for the popular Medicare program. Health reform addressed many of these concerns. In addition to eliminating the "donut hole," the law removes some of the costliest privatization schemes.
The most recent report from the Medicare trustees released last week noted the long-term financial stability of the program has been increased substantially, undercutting Republican calls to eliminate or gut the program.
