Obamacare Provision Costing 32 Percent More Than Projected

Alyene Senger /

Protesters oppose Obamacare at Supreme Court


An Obamacare provision is costing taxpayers 32 percent more than it was projected to.

The provision in Obamacare that gradually reduces seniors’ out-of-pocket costs in the congressionally created coverage gap (commonly referred to as the “donut hole”) in Medicare Part D was projected by the Congressional Budget Office (CBO) to cost taxpayers $6.3 billion from 2010 to 2013. (See Table 5.)

The Centers for Medicare and Medicaid Services (CMS) just released a statement saying that seniors have saved $8.3 billion in prescription drug costs because of government-funded coverage in the gap. This means that even though the year 2013 isn’t over yet, this provision of the law has cost almost 32 percent more than CBO projected it would over this time period.

While this provision will help a small number of seniors who face the gap, it will increase the cost of the Part D benefit, a portion of which will be passed on to the beneficiaries. According to CBO’s preliminary estimate in 2010, “enacting those changes would lead to an average increase in premiums for Part D beneficiaries of about 4 percent in 2011, rising to about 9 percent in 2019.”

This average premium increase means a lot considering how few seniors actually fall into the gap. While the average premiums of all Part D beneficiaries will increase, of the 50.7 million Medicare enrollees in 2012, at this point last year, only 2.3 million beneficiaries had actually fallen into the donut hole, according to the CMS statement.

Due to the program’s competitive structure, Medicare Part D premiums have remained impressively stable in light of the increasing premiums in the rest of health insurance generally. But now the question becomes: How much did the Obamacare provision impact seniors’ premiums? If costs were 32 percent higher than CBO projected, was the impact on the average beneficiary Part D premium proportionately higher? Would Part D premiums have declined in the absence of this Obamacare provision?