The Truth About That Donut Hole

There are so many lies circulating about this subject, let’s clear the air.

…The doughnut hole is a complicated contraption, however, and filling it is far from simple. Here’s a close look at how the doughnut hole works and how it would be closed.

Q: What is the doughnut hole?

A: In 2003, Congress passed legislation that created the Medicare drug benefit, which went into effect in 2006. Private insurers offer the benefit through free-standing drug plans and Medicare Advantage plans, which also offer medical benefits.

The Part D plans have some leeway in how they design their coverage. Under the typical benefit for this year, however, beneficiaries have to pay deductibles of $310 and monthly premiums that average $38.94. After they meet the deductible, beneficiaries are required to pay 25 percent of their drug costs; their drug plans, which the government subsidizes, pick up the rest.

Once total spending by the patients and their drug plans exceeds $2,830, the beneficiaries hit the coverage gap, in which they must pay the full cost of their medications. After they spend another $3,610, they’re eligible for what’s called "catastrophic" coverage, under which they pay only 5 percent of their drug costs.

Q: What will the new law do to close the gap?

A: Beginning this year, any Medicare beneficiary who reaches the doughnut hole will receive a $250 check to help pay for his or her drugs.

Then, starting in January, patients in the coverage gap will get 50 percent discounts on brand-name drugs. The drug companies will finance the price reduction as part of a deal with the White House, in which the industry made tens of billions of dollars in price concessions.

The federal government will play a big role, too, in closing the doughnut hole. In 2013, the government will begin providing subsidies for brand-name drugs bought by seniors who hit the coverage gap. The government’s share will start off small, at 2.5 percent, but will increase to 25 percent by 2020. At that point, the combined industry discounts and government subsidies will add up to 75 percent of brand-name drug costs.

Generic drugs — which cost far less than brand-name drugs do — will be dealt with separately. Beginning next year, government subsidies will cover 7 percent of generic drug costs once people hit the doughnut hole. Washington will pick up additional portions each year until 2020, when federal dollars will cover 75 percent of generic drug costs.

At that point, the doughnut hole effectively will be closed…

Inserted from <McClatchy  DC>

There it is, factually presented in a non-biased format.

In my opinion, it takes too long.  It shows far too much favoritism to Big Pharma.  Of course, that was their price for not reinventing Harry and Louise and flooding the airwaves with anti-reform ads.

However, it is an improvement over the current part D structure.

At the very least, we need to revisit this to speed it up.