Medicare Advantage

Part D Donut Hole: What Happens Under Trump?

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The Medicare Part D coverage gap, also known as the “donut hole,” presents a complex issue in healthcare. Under the Affordable Care Act (ACA) of 2010, the donut hole was set to be completely eliminated by 2020. With the new administration and the promise of healthcare reform, no one is sure what will happen to the donut hole.

What is the Donut Hole?

The donut hole refers to the gap in coverage of medications in Medicare Part D between when you’ve paid a certain amount and before catastrophic coverage starts. In 2017, the coverage limit for prescriptions is $3,700. After you hit this amount, you fall into a gap in coverage until your out-of-pocketing spending level reaches the maximum threshold, which for 2017 is $4,950. Before the ACA, people in the gap would’ve had to pay the full retail cost of prescriptions until they reached the other side of the donut hole. Because of Obamacare, there are discounts in the gap to make medication more affordable, and the goal is to eliminate this gap by 2020.

In 2017, the discount on generics is 49 percent and the discount on brand-name drugs is 60 percent. Each year until 2020, the discount increases so that by 2020, Medicare enrollees are only paying 25 percent of the cost of prescriptions, which effectively closes the gap because it brings the costs up to catastrophic coverage anyway. This system is projected to save about $2,000 per person once implemented.

The donut hole does not affect everyone with Part D coverage, only those who need a lot of prescriptions each month, such as a person with diabetes or a chronic heart problem. But for those people, it’s a big deal. According to the Kaiser Family Foundation, nearly 41 million Americans participate in Medicare Part D. About 25 percent of those people are enrolled in a subsidized program to lower their costs. Republican healthcare reform could drastically change medication costs.

How Additional Reforms May Affect the Donut Hole

President Trump has not specifically addressed the donut hole. He’s discussed repealing Obamacare but has also mentioned aspects of the plan that he would like to keep intact. While he has stated that he wants to keep healthcare affordable for seniors, the president has also appointed Dr. Tom Price as head of the Department of Health and Human Services. Dr. Price and Speaker of the House Paul Ryan are advocates of privatizing Medicare, which would drastically change the structure of the program. Doing so could also potentially increasing the donut hole, in turn increasing out-of-pocket costs for Medicare participants. There’s concern that a Republican healthcare plan would essentially recreate the donut hole and negate the strides the ACA made toward diminishing it.

But Republican plans to reform healthcare aren’t set in stone. In a recent interview with Dr. Price, he mentioned that the new administration needs to make sure that seniors have sufficient access to medications that they need. He stressed that there are better solutions than what is currently in place to provide greater coverage at a lower cost. Throughout the interview, he offered no specific plan to improve healthcare or eliminate the donut hole.

There’s also some concern over an attempt to privatize Medicare. Without regulation of drug companies, costs of medications have been known to increase. According to Forbes magazine, in extreme cases, some seniors could have to choose between buying medications or buying food with their fixed monthly income.

There’s the possibility that Republican healthcare reform will implement a system to offer seniors vouchers toward health insurance. According to The Washington Post, this may offset the costs if the Medicare system becomes privatized, which could help to cover medication bills during the donut hole period. But vouchers may not keep up with inflation and increases in the cost of healthcare, and fewer than a third of Americans support the idea.

During his campaign, President Trump advocated for the importation of medications from other countries. Brand name pharmaceuticals in America are some of the mostly costly in the world. If laws are changed to allow medications to be imported into the states, medication costs could drop significantly, an idea supported across party lines.

Uncertain Future for the Donut Hole

Healthcare reform to Medicare is a politically charged issue. There are no definitive changes from the Trump administration at this time, but if certain features of proposed reform plans are implemented, there may be increased costs for those who land in the coverage gap under Medicare Part D. It’s possible that Trump will do nothing to interfere with Medicare since it’s a popular program that benefits nearly every senior in the country. The new administration may choose to keep the ACA place’s plans for Medicare in place. After the Republicans offered their plan for healthcare reform in 2015, there was no actual change outlined for the donut hole. This implies that the ACA plan to reach large reductions in medication costs by 2020 is still on track. Trump is not an advocate for privatizing Medicare, at least not so far. It’s the one program about which many Republicans and Democrats agree.