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PolitiFact: Obama ad's on the money about Medicare drug savings

By Molly Moorhead, Times Staff Writer

The statement

President Barack Obama "reduced the cost of prescription drugs for nearly 3.6 million Americans in 2011."

President Barack Obama, March 20, in a Web video

The ruling

As the U.S. Supreme Court hears arguments on the national health care law, a new Barack Obama campaign ad touts the improvements in Medicare benefits contained in the legislation.

"As president (Obama) signed the Affordable Care Act … and reduced the cost of prescription drugs for nearly 3.6 million Americans in 2011," the ad says in part.

The ad is referencing Medicare Part D, which covers prescription drugs for beneficiaries.

Beneficiaries in the Medicare Part D program now must pay the first $310 for prescriptions. Then insurance pays up to $2,830. At that point they're in what's known as the doughnut hole with a gap in coverage until they hit an out-of-pocket limit of $4,550. At that point, their coverage takes over again, usually paying about 95 percent of the costs.

The Patient Protection and Affordable Care Act slowly phases out the doughnut hole through price discounts and government subsidies, eliminating it completely in 2020.

Last year, under the terms of the health care law, the doughnut hole shrank a little, with those eligible for Medicare receiving discounts on drugs once they reached the coverage gap.

Drug manufacturers were required to provide a 50 percent discount for covered brand-name drugs, while there were federal subsidies (7 percent discount) for generic drugs.

Both discounts will increase over time until the doughnut hole is effectively closed in 2020.

So the reduced drug costs are real. What about the number of people who benefited?

The Centers for Medicare and Medicaid Services, a division of the Department of Health and Human Services, estimated that total discounts added up to $2.1 billion, or an average of $604 per beneficiary.

It also said 3,576,640 people enjoyed those savings.

The CMS numbers are based on 2011 Part D claims data received through Feb. 29, 2012, the agency said.

So the law is saving Medicare beneficiaries money by phasing out the coverage gap, and the Centers for Medicare and Medicaid said about 3.6 million people saved about $2.1 billion on drugs in 2011. The claim holds up. We rate it True.

MOLLY MOORHEAD, Times Staff Writer

This ruling has been edited for print. Read more at PolitiFact.com.