Affordable Care Act’s ‘donut hole’ fix saves seniors $5.7 billion

By Stephen C. Webster
Friday, February 8, 2013 12:15 EDT
google plus icon
A nurse hugs a senior citizen. Photo: Shutterstock.com.
  • Print Friendly and PDF
  • Email this page

The Affordable Care Act’s prescription for the so-called “donut hole” in Medicare Part D has saved America’s disabled and elderly $5.7 billion on prescription drugs since being implemented, according to a report published Thursday (PDF) by the Centers for Medicare & Medicaid Services.

The patch in the law works by gradually closing the gap in coverage some Medicare recipients face when buying prescription drugs. The new law took effect in 2010 by sending a one-time check to people who reached the coverage gap, and drug prices were significantly discounted for people in the “donut hole” by 2011.

About 6.1 million seniors felt the initial round of benefits, the report adds. Average savings per person should add up to about $5,000 in 2022, although an estimate predicts some could see savings over $18,000.

A chart included in the report also shows how drug prices will drop as discount percentages increase for generic and brand-name pharmaceutical products, stopping at 75 percent discount for both in 2020, when the law will be fully implemented and the coverage gap eliminated entirely.

Taken together, the five states to see the most benefit from the Affordable Care Act’s “donout hole” fix were California, New York, Pennsylvania, Florida and Texas, which saved a total of $1.97 billion since 2010, data shows. Average discounts per person in those states ranged from $609 to $753.

Data on money saved through Medicare comes just two months after health care think tank The Commonwealth Fund published a study that found the Affordable Care Act saved consumers $1.5 billion in 2011 alone by forcing insurers to refund money that customers overpaid for health coverage. That study placed Texas, New Mexico, Missouri, West Virginia and South Carolina as receiving the lion’s share of savings.

Photo: Shutterstock.com.

Stephen C. Webster
Stephen C. Webster
Stephen C. Webster is the senior editor of Raw Story, and is based out of Austin, Texas. He previously worked as the associate editor of The Lone Star Iconoclast in Crawford, Texas, where he covered state politics and the peace movement’s resurgence at the start of the Iraq war. Webster has also contributed to publications such as True/Slant, Austin Monthly, The Dallas Business Journal, The Dallas Morning News, Fort Worth Weekly, The News Connection and others. Follow him on Twitter at @StephenCWebster.
By commenting, you agree to our terms of service
and to abide by our commenting policy.