Monday, December 28, 2009

Health care reform would slowly close Part D "Doughnut hole", but can this be paid for?

In a series called “Health Care Reform 2009” under the Washington Post’s “Politics & The Nation” Amy Goldstein has an important article Monday morning, “The not-so-sweet side of closing the ‘doughnut hole’: Plan widens gap in 2011-2012; Medicare change’s long-term cost uncertain”, link here.

The print version of the paper has a chart on p A3. After a deductible, Medicare picks up ¾ of the cost up to the initial coverage limit, $2700 in 2009. But then the patient must pay for drugs out of her own pocket until reaching the upper limit of $6154. That’s a coverage gap of $3454 in 2009, but in 2010 it will be $3576.

The Senate and House versions, in slightly different ways, would gradually reduce the size of the hole, bringing it to 0 by 2019. Under current law, the coverage gap would expand from $3576 to $6188 in 2019 if the reform were not passed.

The closing of the hole is supposed to be paid for largely by pharmaceutical companies, particularly by encouraging competition, reducing some of their monopoly through the patent process (a very complicated intellectual property issue), forcing them to go generic when possible, and encouraging volume discounts. However Medicare Part D providers (the AARP with United Health Care is the largest) already has negotiated substantial discounts for patients even while in the coverage gap, even for expensive Alzheimers drugs. The involvement of hospice can make the pricing more complicated.

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