Spotlight on Closing the Part D Coverage Gap (“Donut Hole”)
The Supreme Court will review the constitutionality of the Affordable Care Act (ACA) this term in California v. Texas, with oral argument scheduled for November 10, 2020. This ongoing litigation challenges the ACA’s individual mandate, but raises questions about the entire law’s survival, and could result in dismantling the entire ACA.
While the ACA’s changes to the individual insurance market and its expansion of Medicaid have been the focus of much media coverage, the law has affected every part of the health care system, including Medicare. The ACA is woven into Medicare, with over 165 provisions affecting the program. Many of these provisions help beneficiaries and strengthen Medicare’s financial well-being. Striking down the ACA would have disastrous ramifications for Medicare beneficiaries and the U.S. health care system as a whole. In a series of CMA Alerts leading up to the Supreme Court oral argument, the Center will highlight some of the harms undoing the ACA would bring to Medicare and Medicare beneficiaries.
Before the ACA, prescription drug coverage (Medicare Part D) required enrollees to pay the full cost of their drugs in the benefit’s coverage gap, commonly known as the “doughnut hole.” The doughnut hole was essentially a very large deductible that kicked in every year after beneficiaries’ drug costs exceeded an initial coverage limit. After reaching the initial coverage limit, enrollees who did not receive low-income subsidies had to pay 100% of their prescription drug costs until they spent enough to qualify for catastrophic coverage. Many Medicare beneficiaries struggled to afford their medications while they were in the doughnut hole. As a result, many reduced their medications (by splitting pills or skipping doses, for example), or stopped taking their medications altogether, impacting quality of life and health outcomes.
The ACA included a provision to phase out the coverage gap for both brand-name and generic drugs by 2020; the Bipartisan Budget Act of 2018 made additional changes to the coverage gap, closing the Part D coverage gap for brand-name drugs in 2019 instead of 2020. Closing the doughnut hole eased the medication affordability crisis for beneficiaries, with billions of dollars of savings in drug costs.
Undoing the ACA would jeopardize drug coverage for millions of Medicare beneficiaries. Reinstating the coverage gap would increase costs for Part D enrollees who have relatively high drug spending. Closing the “doughnut hole” was very popular with the public; according to Kaiser Family Foundation, in 2018, 81% of the public (79% of seniors) had a favorable view that “the [ACA] gradually closes the Medicare prescription drug ‘doughnut hole’ or ‘coverage gap’ so people on Medicare will no longer be required to pay the full cost of their medications when they reach the gap.”
The Center for Medicare Advocacy strongly opposes dismantling the ACA and the lawsuit that seeks to do so on unmerited grounds. The Center joined AARP and Justice in Aging in submitting an amicus brief in support of California and the other states defending the ACA against the lawsuit now at the Supreme Court. The brief highlights the ACA’s key protections for older adults and the devastating consequences that would ensue if the law is nullified.
- Kaiser Family Foundation, “Potential Impact of California v. Texas Decision on Key Provisions of the Affordable Care Act” (updated September 2020): https://www.kff.org/health-reform/issue-brief/potential-impact-of-california-v-texas-decision-on-key-provisions-of-the-affordable-care-act/#medicare
- Kaiser Family Foundation, “The Medicare Part D Coverage Gap: Costs and Consequences in 2007” (August 2008): https://www.kff.org/wp-content/uploads/2013/01/7811.pdf
- CMS Report, The Affordable Care Act: A Stronger Medicare Program (February 2013): http://www.cms.gov/apps/files/MedicareReport2012.pdf.
- Dena Bunis, Medicare “Doughnut Hole” Will Close in 2019, AARP (February 2018), https://www.aarp.org/health/medicareinsurance/info-2018/part-d-donut-holecloses-fd.html
- Center statement concerning the fate of the ACA in light of Supreme Court nomination hearings (October 2020): https://medicareadvocacy.org/supreme-court-nomination-could-have-devastating-consequences-for-the-affordable-care-act-and-medicare/
October 22, 2020 – K. Kertesz