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HHS: Seniors in Medicare Doughnut Hole Saved $604 on Average in 2011

By Jane Norman, CQ HealthBeat Associate Editor

February 2, 2012 -- The Obama administration recently touted the success of the health care law when it comes to prescription drugs for Medicare beneficiaries, saying that seniors who hit the doughnut hole saved $604 on average in 2011 compared to what their costs would have been without the overhaul.

In addition, the Department of Health and Human Services (HHS) released a report predicting that Medicare recipients will save close to $4,200 in total on health care spending between 2011 and 2021.

Under the health care law (PL 111-148, PL 111-152), manufacturers must provide a discount on brand name drugs for seniors in the doughnut hole—those who exceed certain spending limits for their prescription medicines but don't yet qualify for catastrophic assistance. While in the doughnut hole, beneficiaries have had to pay 100 percent of their drug costs.

In 2011, the discount is 50 percent for brand name drugs and 7 percent for generic drugs. And the discounts will rise as the years go on. Subsidies will be provided later as well, and eventually the doughnut hole will be eliminated.

HHS officials said that 3.6 million seniors saved $2.1 billion in 2011 compared with what they would have paid for prescription drugs otherwise. That group included more than 2 million women.

Of the money saved, $300 million was on drugs that lower blood sugar levels, $263 million on those that lower cholesterol and $228 million on those that treat asthma.

Projecting out over the next 10 years, officials said they believe all seniors will save money, not only because of the drug discounts and subsidies but also due to the effect of free preventive services like mammograms, slower growth in Part B premiums and slower growth in cost sharing for both Part A and Part B services.

House Republicans shot back, saying that the reason Medicare spending might go down is because hospitals and clinics may be forced to close and seniors may have to wait to see physicians, citing an analysis by actuaries for the Centers for Medicare and Medicaid Services.

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