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Louis Jacobson
By Louis Jacobson March 26, 2010

Health care bill will gobble up doughnut hole -- eventually

The health care bill signed into law by President Barack Obama is poised to "close the 'doughnut hole' in the Medicare Part D Prescription Drug Program that limits benefits for seniors with more than $2,250 but less than $5,100 in annual drug costs."

First, some background on the doughnut hole. In 2010, seniors in the Medicare Part D program must pay the first $310 for prescriptions before coverage kicks in. For subsequent total drug costs between $310 and $2,830, the government will pay 75 percent and beneficiaries pay 25 percent. (The numbers are different from Obama's promise due to increases since he made the statement.)

Then, starting at $2,830, beneficiaries must pay the entire costs until they hit an out-of-pocket limit of $4,550. That's what's known as the doughnut hole. After that, "catastrophic coverage" begins, with the government paying 95 percent of costs.

The hole won't be closed immediately, but will instead be phased in over the next 10 years.

This year, beneficiaries who reach the doughnut hole will receive a $250 rebate. After that, federal subsidies will enable the patient's share of the payment to be gradually reduced from 100 percent to 25 percent by 2020. At 25 percent, the doughnut hole range will have the same co-pay rate as the prior range.

Separately, brand-name drugmakers will be obligated to provide discounts for prescriptions filled through Medicare Part D starting in 2011.

The hole will hang on for a while, but its eventual disappearance is now enshrined in law. Since Obama did not specify a timeline in his promise, we are rating it a Promise Kept.

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Angie Drobnic Holan
By Angie Drobnic Holan July 15, 2009

Health care bill would close Medicare doughnut hole

After months of talking about health care reform, the U.S. House of Representatives introduced major legislation to overhaul the nation's health care system. House Democrats unveiled the 1,000-plus-page bill, called America's Affordable Health Choices Act of 2009, on July 14, and it includes most of President Barack Obama's key proposals on health reform.

One of Obama's campaign pledges was to close the "doughnut hole" in the Medicare Part D Prescription Drug Program, a coverage gap that affects some seniors who have to pay for drugs that might otherwise be covered. The health care bill aims to slowly eliminate the gap, beginning with a $500 reduction in 2011 and completing phase-out by 2023. Under the House bill, that move would be paid for by requiring drug manufacturers to pay new rebates involving the Medicaid program.

We should be clear that there's a long way to go — maybe months — before this bill becomes law. It has to get through the Senate, where many an ambitious House bill has seen its hopes dashed.

Nevertheless, the bill marks significant, measurable progress on Obama's promise, and we rate it In the Works.

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