Nearly 212,000 New Jersey seniors could end up paying another $1,200 on average for their medications each year if a repeal of Obamacare meant the return Medicare’s infamous “doughnut hole,” a health policy group estimates.
A little-known provision of the Affordable Care Act has chipped away at the unexpected costs seniors encounter when their prescription drug bills get too high. Under the ACA, subsidies have gradually lowered the cost of generics for those seniors. The gap in coverage was to have been phased out by 2020.
The “repeal and replace” policies now under discussion in Washington haven’t been specific enough to tell what would happen to that component of the law, said Raymond Castro, senior policy analyst with New Jersey Policy Perspective, a think tank based in Trenton.
By Castro’s estimates, New Jersey Medicare recipients whose drug bills are high enough to force co-pays could lose nearly $283 million in federal subsidies that keep their costs down.
That section of the 2010 Affordable Care Act hasn’t received much attention, Castro acknowledged.
“I don’t think most seniors understand it,” he said. “There’s an appalling lack of knowledge about the ACA. A lot of them watch Fox News and very conservative coverage. They probably don’t connect the dots.”
“The ACA is actually getting more popular now that people are figuring out what they’re going to lose,” he added.
When drug coverage was added to Medicare in 2006, once a small deductible was met, recipients had to pay for 25 percent of their prescription drugs. Once their out-of-pocket bills reached a certain threshold of about $6,000, Medicare would pick up most of the tab.
That in-between area was dubbed the “doughnut hole,” reflecting an the gap in coverage. Under Obamacare, the federal government subsidized the cost of generics and set limits to gradually close that gap by the year 2020.
The average estimated savings for the 212,000 Medicare recipients in New Jersey who typically end up in the gap is $1,241 per person annually, Castro calculated. While most of those recipients are seniors, Medicare also covers many of the permanently disabled. “Their costs would simply go up,” he said, although he acknowledged that it is not yet known what any new legislation would or would not cover.
That estimate was included in a report that also looked at the economic impact of changing a major law that governs 18 percent of the New Jersey economy.
Kathleen O’Brien may be reached at kobrien@njadvancemedia.com. Follow her on Twitter @OBrienLedger. Find NJ.com on Facebook.
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