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Obamacare saved Illinois seniors total of $332 million, by closing 'donut hole'

The Affordable Care Act (ACA) that was passed in March of 2010 filled the so-called prescription drug "donut hole." The expensive Medicare D drug program cost seniors from $750 to $3,600 per year. The first $750 of the drug purchase came from a $250 deductible phase, and $500 in the initial coverage limit, in which the Centers for Medicare and Medicaid Services (CMS) covered 75 percent of the next $2,000.)

Senator James Talent (R-MO) (C) speaks alongside members of Congress and during a media conference on Medicare on Capitol Hill May 18, 2006 in Washington, DC. The conference was held regarding the Medicare Part D prescription drug program.
(Photo by Mark Wilson/Getty Images)

According to new data released Tuesday, in Illinois alone, 114,749 seniors and people with disabilities saved $91,914,648, or an average of $801 per beneficiary, during the first 10 months of 2013. Overall, seniors in Illinois have saved $332,985,871 since passage of the Affordable Care Act. At the same time, these seniors will be free to use more of their Social Security benefit cost of living adjustment on what they choose because the Medicare Part B premium will not increase in 2014, thanks to the health care law’s successful efforts to keep cost growth low.

Across the nation more than more than 7.3 million seniors and people with disabilities have saved a total $8.9 billion, according to new data released Tuesday by the Centers for Medicare & Medicaid Services (CMS).

In the first year of operation, there was a substantial reduction in out-of-pocket costs and a moderate increase in medication utilization among Medicare beneficiaries, although there was no evidence of improvement in emergency department use, hospitalizations, or preference-based health utility for those eligible for Part D.

The program was confusing and caused uproar among seniors and persons with disabilities.

During the 2008 campaign for President of the United States, then-U.S. Senator Barack Obama vowed to "fill" that donut on behalf of seniors.

Since the Affordable Care Act was enacted, more than 7.3 million seniors and people with disabilities who reached the donut hole in their Medicare Part D (Medicare Prescription Drug Coverage) plans have saved $8.9 billion on their prescription drugs, an average of $1,209 per person since the program began.

During the first 10 months of 2013, nearly 3.4 million people nationwide who reached the coverage gap -- known as the “donut hole” -- this year have saved $2.9 billion, an average of $866 per beneficiary. These figures are higher than at this same point last year, when 2.8 million beneficiaries had saved $1.8 billion for an average of $677 per beneficiary.

"Protecting seniors from the dreaded donut hole and high prescription drug costs is an important Affordable Care Act reform that Medicare beneficiaries have come to depend on," said CMS Administrator Marilyn Tavenner. "Today’s data shows that the law is already helping millions of seniors save billions of dollars off their needed medications."

For many people enrolled in Medicare Part D, the Medicare “donut hole” is the gap in the Medicare prescription drug benefit before catastrophic coverage for prescriptions takes effect. Without Affordable Care Act assistance, Medicare beneficiaries would pay out-of-pocket for the entire cost of prescription drugs once they hit the donut hole, until they reach catastrophic coverage.

But under the discount program in the Affordable Care Act, in 2010, anyone with a Medicare prescription drug plan who reached the prescription drug donut hole got a $250 rebate. In 2011, beneficiaries who landed in the donut hole began receiving discounts on covered brand-name drugs and savings on generic drugs.

Next year, Medicare Part D participants who fall into the donut hole will receive savings of about 53 percent on the cost of brand name drugs and 28 percent on the cost of generic drugs. These savings and Medicare coverage will gradually increase until 2020, when the donut hole will be closed.

News on the continued savings on prescription drugs comes on the heels of new information showing historically low levels of growth in Medicare spending. For example:

  • CMS recently announced that the Medicare’s Part B premium will not increase in 2014, and that the last five years have been among the slowest periods of average Part B premium growth in the program’s history.
  • The Part B deductible will also not increase, having decreased in 2014. The Part B premium and deductible for 2014 are 15 percent below what was projected in 2010, the year the Affordable Care Act was enacted.
  • Also as a result of the Affordable Care Act, Medicare Advantage and Prescription Drug Plans remain stable and strong. Earlier this year, CMS announced that the average Medicare Advantage (MA) premium in 2014 is projected to be $32.60. CMS also estimated that the average basic Medicare prescription drug plan premium in 2014 is projected to be $31 per month, holding steady for 4 years in a row. The deductible for standard Part D plans will decline by $15 in 2014, to $310. Since the passage of the Affordable Care Act, average MA premiums are down by 9.8 percent.
  • Since enactment of the Affordable Care Act, the life of the Medicare trust fund has been extended by nearly ten years, till 2026.

The Annual Open Enrollment period for health and drug plans began on October 15 and ends on December 7.

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