Updated October 2017
Recent news regarding an executive order signed on October 12 by President Trump has undoubtedly added to the confusion over the health insurance industry and the individual market. While details of the executive order and how it will impact healthcare remain to be unpacked by different federal agencies, one thing we can say right now is that the latest move by the president to disrupt the Affordable Care Act – and the upcoming open enrollment period for the individual market – does not affect Medicare in any way.
If you have original Medicare or Medicare Advantage, you will have from October 15 through December 7 to make changes to your plan as usual. During this period, you can change Advantage plans, drop your Advantage plan for original Medicare or switch from original Medicare to an Advantage plan. Rest assured that Trump’s executive order, even if it were carried out to the letter right this second, will not affect Medicare open enrollment or the Medicare program itself, including the Part D donut hole.
Updated August 2017
If you or a family member is one of the 55 million people who take part in Medicare, then you know that any changes to this unique entitlement program can make a big impact. One of the goals of the Affordable Care Act (ACA) was to reform Medicare so that it could accommodate future generations of retirees. Because of inefficiencies throughout the system, Medicare had become overpriced and inefficient. President Obama sought to change that with some very specific reforms.
President Trump and the ongoing saga that is healthcare reform has raised many questions regarding Medicare and Trumpcare, and what impact any repeal of Obamacare might have on medicare part d funding. Or Put another way, how will Trumpcare if it is passed, impact prescription costs for seniors moving forward.
The federal government altered the way it pays physicians when it introduced the ACA in 2010. Instead of physicians submitting an invoice and getting paid based on a schedule of fees, the government instead wanted to reward doctors and hospitals for providing quality care. The new billing system cut out hundreds of millions of dollars in Medicare wasteful spending, so the government decided to use part of those savings to close the Part D donut hole.
What is the Medicare Part D Donut Hole?
Medicare Part D covers prescription medication costs for seniors as an optional add-on portion to traditional Medicare. For years, the program paid all prescription costs up to a certain level and then left the senior to pay the rest. When it was first introduced, the Medicare Part D program was helping seniors to get the medication they needed at an affordable rate.
Over time, Part D coverage failed to keep up with rapidly rising costs in the pharmaceutical industry. The amount that Part D would pay and the amount seniors were responsible for created a growing gap, called the donut hole, which many beneficiaries got trapped in even though they had insurance. The donut hole grew ever larger and the federal government did little to address it.
Filling in the Donut Hole
The ACA finally addressed the donut hole issue, creating a plan that would actually close the gap for seniors over time. Starting in 2013, Medicare now offers a discount on the price of drugs to help beneficiaries cover the cost of their medications while they’re stuck in the coverage gap. Until you reach the other side of the hole – the out-of-pocket spending threshold, which triggers catastrophic coverage – you’ll only pay a portion of the retail cost of your drugs instead of the full price. In 2017, Part D beneficiaries pay 51 percent of the cost of generic prescriptions and 40 percent for brand-name medications.
The ACA’s program is one that addresses the donut hole every year from 2013 until the hole closes in 2020. By 2020, seniors will only have to pay 25 percent of their prescription costs under Medicare Part D. To many seniors, especially those on limited or fixed incomes, this program saves them a great deal of money and makes medication more accessible.
President Trump’s Plans for Medicare
Donald Trump has never publicly addressed what he will do with the plan to close the donut hole. Since this is a very important issue to seniors, it was expected that Trump would mention it as he was campaigning. But Trump never discussed the donut hole in the debates, at his rallies or in anything he published online.
The closest Trump ever got to mentioning the Part D coverage gap was when he reiterated that he wants to preserve Medicare and keep it functional. However, Trump’s potential appointment of Dr. Tom Price as Secretary of the Department of Health and Human Services have led people to wonder what will really happen since Price and House Speaker Paul Ryan are both proponents of privatizing Medicare. The process of privatizing Medicare will require a lot of structural changes, and that could bring the donut hole back.
Will Trumpcare Bring Back the Medicare Donut Hole?
When the GOP put together its own version of healthcare reform in 2015, the plan did not take away the donut hole provision. To date, Republican plans for health care reform going forward have not discussed eliminating the coverage gap assistance.
Since Trump has not said anything publicly about the coverage gap, observers can only assume that the ACA’s solution to the problem will be left in place and the donut hole will be closed by 2020. That means that the schedule of discounts put together in the ACA and the legislation that affects the prices set by pharmaceutical companies will remain in effect as well. The discount increases each year until beneficiaries are only paying 25 percent of the cost of their prescriptions.
If Trump and a GOP Congress succeed in repealing Obamacare entirely, then it is possible that the ACA solution to the donut hole would go away and the problem would return. But as it stands now, the coverage gap will be closed by 2020, which is good news for millions of seniors across the country.