An Obamacare Repeal Would Increase Beneficiaries’ Part D Costs

An Obamacare Repeal Would Increase Beneficiaries’ Part D Costs

A total repeal of the 2010 Affordable Care Act, known to most as “Obamacare,” forms a key component of budget plans recently passed by the U.S. House and Senate. But so far there’s been little discussion about the negative financial impact such a repeal would have on Medicare beneficiaries. TSCL is strongly opposing Medicare cuts that would have the biggest impact on people who use enough prescriptions to hit the annual Part D “doughnut hole” coverage gap.

The 2010 health law included new benefits for Medicare recipients by filling the “doughnut hole.” It works in two ways. First, the health law provided new co-insurance for brand name and generic drugs. In 2015, beneficiaries hit the coverage gap after they and their plans spend $2,960 on covered drugs. Once the coverage gap is reached, beneficiaries then pay a co-insurance of 45% of the plan’s cost for covered brand - name drugs, and 65% for covered generic drugs until reaching a catastrophic threshold. A complete repeal would repeal the coverage gap co-insurance, and beneficiaries would end up paying 100% of the cost of covered drugs until the catastrophic threshold is reached instead.

Second, the law also filled in the doughnut hole by reducing the rate of growth in the catastrophic threshold — the amount beneficiaries must spend out-of-pocket before catastrophic coverage takes over. At that point beneficiaries have a small fixed co-pay. In 2014, for example, the annual catastrophic threshold fell from $4,750 in 2013, to $4,550 — the same level that it was in 2010. While the threshold rose in 2015 to $4,700 out-of-pocket, that’s still less than it was in 2013.

TSCL is strongly opposed to legislation that would cut Medicare Part D benefits and increase costs. But TSCL also feels that Obamacare needs to be fixed — middle income families and some Medicare Advantage enrollees are getting squeezed by rising healthcare costs. TSCL believes that Congress should take a targeted approach and fix what isn’t working.

TSCL is closely watching Obamacare repeal efforts and working with Members of Congress to relay the views of TSCL’s supporters.