Side Effects: Donut Hole Hold-Up

Kathryn Nix / June 14, 2010

Last Thursday, the White House trumpeted Obamacare’s first step in closing the Medicare “donut hole.” Checks in the amount of $250 were sent to 80,000 seniors in the “hole”—a gap in Medicare’s coverage of prescription drug benefits for seniors. Ultimately, Washington will cut 4 million of these checks, totaling $1 billion, to help paper over the coverage gap.

The gap was no accident, mind you. Congress crafted it deliberately in 2003. It enabled them to claim, with the Congressional Budget Office’s blessing, that the new entitlement to drug coverage under Medicare would cost no more than $400 billion over 10 years.

Under the “donut hole” provision, drug benefits run out for some seniors, who must then pick up the total cost of their prescriptions. However, once they pay $3,610 out of pocket, the coverage kicks back in again.

The $250 rebate checks are intended to offset a portion of those out-of-pocket expenses.

But Politico reports that, “No sooner than the Administration dropped the first batch of $250 Medicare rebate checks in the mail, they have already run into their first snafu.” (more…)