Obamacare, SCOTUS and Medicare Part D

Obamacare may be scrapped in part or completely if SCOTUS (Supreme Court of the U.S.) rules against the law as a violation of the Constitution. If that happens, there is speculation that the cost of medication for Medicare Part D  beneficiaries might increase.  

Obamacare provides "the necessary legal framework" for drug companies to slash brand-name drug prices by half for seniors and people with disabilities when they enter a coverage gap in their Medicare drug plans, said Matthew Bennett, a spokesman for the Pharmaceutical Research and Manufacturers of America.  Eventually the discounts grow so that the gap, known as the doughnut hole, is closed by 2020.  But if (Obamacare) goes, the discounts may go, too.

Part of Obamacare requires pharmaceutical manufacturers to provide a 50% discount on brand-name prescriptions filled in the Medicare Part D coverage gap beginning in 2011 and begins phasing-in federal subsidies for generic prescriptions filled in the Medicare Part D coverage gap.

If Obamacare is struck down the drug companies are no longer required by law to discount their medication.

If it isn't obvious, the pharmaceutical companies are not reducing the price of the drugs out of the goodness of their heart under Obamacare. All Obamacare did was to create a cost shift to others not in Medicare that will pay a higher price than they would have without Obamacare. Another offshoot of the mandated discount is increasing the price of some medications which puts them in a higher tier under a drug formulary.

In other words, they mark the drugs up so they can mark them down.

Voluntary drug coverage was added to Medicare in 2006, but consumers and advocates have been eager to get rid of the coverage gap. Insurance coverage stops when the beneficiary and the insurer together have spent $2,930 for prescription drugs, excluding monthly premiums. Under Obamacare, beneficiaries then get a 50 percent discount on brand-name drugs and 14 percent on generics drugs. When the beneficiary alone has spent a total of $4,700, coverage restarts. At that point the drug plan picks up 95 percent of the cost.

How is Medicare Part D voluntary if the government assesses a late enrollment penalty (LEP) if you do not buy a Part D when first eligible?

So while the discounts, and closing the donut hole may go away if Obamacare is overruled, the truth is the discounts were more smoke and mirrors than anything . . . kind of like political promises.

Drug companies could try to offer the discounts on their own but that effort could run afoul of federal antitrust laws that generally prohibit businesses from agreeing together to set prices for their products.  An individual drug company could offer Part D members coverage gap discounts, but it would have to steer clear of anti-fraud laws that ban a company from giving something of value to persuade beneficiaries to use its products.

Isn't it nice when the government interferes with free trade?

For all the political promises, lies and distortions, Obamacare is not a good law and Medicare Part D is more illusion than actual insurance.