Obamacare Medicare Part D Works, But Critics Call Plan Wasteful

Seniors saved billions in prescription drug costs under Obamacare.

A senior citizen holds a sign during a rally to protect federal health programs at the 8th Annual Healthy Living Festival on July 15, 2011 in Oakland, California.
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It seems everyday there are reports on the latest glitch associated with the rollout of the Affordable Care Act. But Tuesday, word from a government agency is that seniors enrolled in the Medicare Part D portion of Obamacare are saving billions.

"Seniors and people with disabilities with Medicare prescription drug plan coverage saved $8.9 billion to date on their prescription drugs thanks to the Affordable Care Act," the Center for Medicare and Medicaid Studies, said in a report. And as a result of these savings, CMS said, seniors will now have more of their Social Security benefits available to use on what they want, and not expensive medications.

[READ: Obamacare Opponents Cite Schumer in Bid to Defeat Contraception Mandate]

One of the major provisions of Obamacare, enacted in 2010, was the stop-gap provision aimed at helping seniors avoid the so-called donut hole. As a result of terms in a 2006 law, seniors were being hurt by the limits placed on how much assistance the government would provide. When patients hit a threshold known as the "donut hole" they would pay the full price of their medications themselves for a period, then after reaching an upper limit, known as catastrophic drug coverage, patients would again be granted assistance, explained Laurie Tarkan, the executive editor of WellBeeFile.com a website dedicated to deconstructing the new health care law for consumers.

But Obamacare has narrowed this gap. Beginning in 2010, the government started helping people out of the coverage gap with a one-time rebate, which then grew into an increasing percentage discount of prescription costs. By 2014 the coverage gap will have narrowed to expenditures between $2,850 on medications and the catastrophic threshold of $4,550. In between the government will pay a percentage of prescription costs. By 2020 the donut hole will close completely.

ProPublica, however, a nonprofit investigative journalism foundation, says the savings are not real.

In a report released earlier in November, the group found that Medicare Part D has actually wasted billions, since its inception in 2006. A large part of the waste comes from a benefit that allows low-income patients to pay less than $7 for a prescription, regardless of its actual market price.

[READ: Midsize Firms Embrace Health Reforms of Their Own Ahead of Obamacare]

"The unintended consequence is that doctors can dole out name brands with little fear of pushback from patients about price," wrote ProPublica's Charlie Ornstein, Tracy Weber and Jennifer LaFleur.

ProPublica makes clear only a fraction of the doctors analyzed – 913 according to its estimates – are responsible for the extravagant spending that is costing taxpayers so much. Roughly half of these doctors have at some point also accepted consulting fees from drug companies.

"At some point, I think we have to hold prescribers accountable for their prescribing," Dr. Nancy Morden, an associate professor at the Dartmouth Institute for Health Policy and Clinical Practice who has studied Part D, told ProPublica.

The CMS did not respond to several attempts for comment since Wednesday.

There may be some serious wrinkles in the implementation of Medicare Part D, particularly in terms of oversight, but many supporters remain optimistic including Tarkan.

"Obviously this is an unintended consequence of the law and is not because of large numbers of seniors demanding expensive drugs but of smaller numbers of physicians prescribing irresponsibly," she said in an email.

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