Closing the Medicare Doughnut Hole: Changes in Prescription Drug Utilization and Out-of-Pocket Spending Among Medicare Beneficiaries With Part D Coverage After the Affordable Care Act.

Abstract

The Affordable Care Act (ACA) include provisions that reduce beneficiaries' cost sharing and eventually closes the coverage gap-known as the "doughnut hole"-that was originally part of Medicare prescription drug coverage implemented in 2006. This study examines changes in overall prescription drug utilization and out-of-pocket spending as well as by manufacturer type (brand vs. generic), through 2013 as a result of the doughnut hole provisions of the ACA. This analysis is based on data from Medical Expenditure Panel Survey and the sample for this analysis includes all individuals 55 years of age and older. A difference-in-differences methodology was adopted to measure changes in drug utilization and out-of-pocket spending among both the treatment group and the comparison group after the ACA. The findings from this study suggest that overall out-of-pocket spending significantly decreased after closing the coverage gap, mainly because of a significant reduction in out-of-pocket spending on brand-name drugs. Conversely, the results show that generic drug utilization increased after closing the coverage gap. As expected, the effects were considerably larger for people who fell into the doughnut hole. The ACA doughnut hole provisions likely contributed to a reduction in out-of-pocket spending for prescription drugs for part D beneficiaries, especially for people who fell into the doughnut hole.