Texas ACA Case Could Re-Open Medicare Part D Donut Hole

House Democrats are warning Republicans that letting the federal courts kill all of the Affordable Care Act (ACA) could kill programs many Republicans like — such as the ACA provision that’s closing the Medicare Part D prescription drug plan benefits “donut hole” — as well as the programs they commonly think of as “Obamacare.”

House Democrats have put the warning in House Resolution 271, a measure that calls for the administration of President Donald Trump to end efforts to overturn the ACA.

Rep. Colin Allred, D-Texas, is the lead sponsor.

Members of the House Rules Committee are preparing to meet at 5 p.m. Eastern Daylight Time today to package the resolution for action on the House floor.

The committee plans to stream live video of the hearing here.

A recording of the video will be available after the meeting ends.

The resolution could come up for a vote on the House floor any time this week, according to a bill consideration list posted by House leaders.

The ACA is made up of two statutes that were signed into law in 2010: the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act.

Allred says in the text of H.Res. 271 that killing all of the ACA would hurt people using ACA Medicaid expansion coverage, and people with health problems, who might have no ability to buy individual major medical coverage in some states if the death of the ACA eliminated the federal ban on medical underwriting in the individual major medical market.

Allred also notes that killing all of the ACA would eliminate the ACA provisions that have been closing the Medicare Part D program benefits donut hole.

Before 2010, “Medicare enrollees faced massive out-of-pocket prescription drug costs once they reached a certain threshold known as the Medicare ‘’donut hole,’ and since the donut hole began closing in 2010, millions of Medicare beneficiaries have saved billions of dollars on prescription drugs,” Allred says in the resolution text.

“At a time when 3 in 10 adults report not taking prescribed medicines because of the cost, if the Trump administration succeeds in its argument before the court, seniors enrolled in Medicare would face billions of dollars in new prescription drug costs,” Allred says.

Medicare Part D Donut Hole Primer

The Medicare Part D program sets a ceiling on coverage for ordinary drugs. Once participants reach the minimum level for catastrophic drug spending, then Medicare Part D plan catastrophic coverage kicks in.

For 2019, the cap on ordinary coverage is $3,820. The catastrophic spending level is $5,100 in out-of-pocket drug spending.

While enrollees are in the donut hole, they get a 75% discount on brand-name drugs and a 63% discount on generic drugs.

One goal of the donut hole system is to reduce government spending on drugs for patients who reach the donut hole.

Another goal is to give patients a financial incentive to avoid unnecessary use of the kinds of expensive drugs that could get them into the donut hole.

Texas v. United States Basics

Texas officials and other officials who oppose the ACA filed the Texas v. United States in a federal district court in Texas, in an effort to use a relatively small change in one ACA provision to get the entire act nullified.

The ACA opponents have objected to an ACA provision that requires many people to have what the government classifies as solid major medical coverage, or minimum essential coverage.

Originally, the provision required some people who failed to have minimum essential coverage for enough of the year to pay a penalty.

The U.S. Supreme Court ruled that ACA opponents could not sue to have the ACA’s “individual shared responsibility” penalty, or individual mandate penalty, declared unconstitutional, because the penalty was a tax, and a federal law prohibits taxpayers from suing to have the courts use injunctions to block new taxes.

Congress later passed a legislative package that included a provision setting the individual mandate penalty at zero.

ACA opponents have argued that, because the penalty is now set at zero, the provision is simply a bare requirement for some people to have minimum essential coverage, not a tax. Those opponents have argued that the courts should declare that a bare requirement for people to have health insurance is unconstitutional.

Because the ACA has no provision keeping the rest of the act in force if one part is nullified, declaring the individual mandate provision unconstitutional should overturn all of the ACA, ACA opponents contend.

Trump administration lawyers originally sought to separate the ACA provisions directly related to “Obamacare” — the major medical insurance underwriting and pricing provisions — from the other provisions. Trump’s lawyers asked the district court judge to overturn the Obamacare provisions but leave the others intact.

Judge Reed O’Connor, the district court judge, sided with the ACA opponents who brought the suit. He ruled that all of the ACA is unconstitutional.

The case is now being appealed to the 5th U.S. Circuit of Appeals.

California, New York state and other states that support the ACA are seeking permission to intervene in the case. Those states are fighting to keep the ACA in place.

The Trump administration is now saying that it would like the court to accept the district court’s decision and overturn all of the ACA.

Resources