Health Reform and Medicare

:
Closing the Doughnut Hole
The final health care reform package closes the Part D “doughnut hole”—the gap in drug coverage during which people with Medicare must pay the full cost of their prescriptions out of pocket. All consumers who reach this coverage gap in 2010 will receive a $250 rebate. Health care reform phases out the doughnut hole by decreasing the consumer’s share of drug costs during the doughnut hole until it reaches 25 percent in 2020 for both brand-name and generic drugs. However, the phase-out works differently for brand-name and generic drugs. The charts below illustrate how much the consumer will pay during the doughnut hole for both brand-name and generic drugs through 2020, when the phase-out will be complete.

PHASE-OUT OF THE DOUGHNUT HOLE FOR BRAND-NAME DRUGS (Percentages represent share of total drug cost) Year Pharmaceutical Manufacturer Discount 0 50 % 50 % 50 % 50 % 50 % 50 % 50 % 50 % 50 % 50 % Government Subsidy (paid through plans) 0 0 0 2.5 % 2.5 % 5% 5% 10% 15% 20% 25% Consumer Responsibility 100% less the $250 rebate for brand name and generic drugs 50 % 50 % 47.5 % 47.5 % 45% 45% 40% 35% 30% 25%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

See the next page for generic drugs

PHASE-OUT OF THE DOUGHNUT HOLE FOR GENERIC DRUGS (Percentages represent share of total drug cost) Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 . Government Subsidy (paid through plans) 0 7% 14% 21% 28% 35% 42% 49% 56% 63% 75% Consumer Responsibility 100% less the $250 rebate for
brand name and generic drugs

93% 86% 79% 72% 65% 58% 51% 44% 37% 25%

April 1, 2010

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