New Proposal Fills the ‘Doughnut Hole’ for Medicare Recipients

Last week, the Obama administration announced a proposal that would cut in half the prescription drug costs for all Medicare recipients who fall into a coverage gap in their drug plans.

As the nation’s largest federal health care program, Medicare covers nearly 40 million Americans, primarily seniors over the age of 65 and people with disabilities. The Medicare Part D Prescription Drug Plan (PDP) allows Medicare patients to obtain insurance that covers some of their prescription drug costs.

Currently, more than 26 million Medicare beneficiaries are enrolled in the plan, but about 26 percent of them are affected by a coverage gap.  Medicare covers costs up to a specific point and then beyond a certain point, which forces beneficiaries that fall between these coverage levels, commonly referred to as the “doughnut hole,” to pay for drugs out of their own pocket or stop taking medications if they can’t afford to pay.

The proposal will come at no cost to the government. All drug manufacturers have agreed to donate half the cost of their brand name (but not generic) drugs to all people who fall within the gap.

“Too many Americans who fall into the coverage gap stop taking their medications because they simply cannot afford them. They will now have a new opportunity to lead a healthier life,” said A. Barry Rand, CEO of AARP. “This is an early win for reform and a major step forward.”

The plan will likely be considered as Congress takes up health care reform legislation later this year, and if passed, it will go into effect in July 2010.