Senate Finance Rejects Filling Medicare Doughnut Hole

Janice Simmons, for HealthLeaders Media , September 25, 2009

Discussions involving seniors and Medicare—including closing the gap in Medicare coverage known as the "doughnut hole"—predominated Thursday on the third round of hearings on the Senate Finance Committee bill on healthcare reform.

Near the end of the morning session, three Democrats ended up joining 10 Republicans on the panel to defeat 10-13 a proposed amendment that essentially would have turned over the deal reached with pharmaceutical manufacturers earlier this year with the White House. The deal had called for the manufacturers to provider $80 billion in savings on drug costs during the next decade—including a 50% discount for seniors who fall into the "doughnut hole" coverage gap.

The amendment, proposed by Sen. Bill Nelson (D-FL), called for the manufacturers to rebate $106 billion over 10 years to the government for medications used by low income Medicare beneficiaries.

"Let me say I want to close the doughnut hole as much as everybody else here, but I think the way it is being closed here is inappropriate," said Sen. Max Baucus, chairman of the Senate Finance Committee, who voted against the amendment. "We have to find some other way at some other time to close the doughnut hole."

Sens. Tom Carper (D-DE) and Robert Menendez (D-NJ) also joined the panel's Republicans in defeating the amendment. Menendez told senators that the amendment could "very well undermine the essence of this agreement" with the White House and "put us in a position that makes it very difficult to move forward."

Nelson's amendment would have filled the so called doughnut hole—a gap in Medicare's Part D drug benefit where beneficiaries must pay the full cost for their prescription medicines—by re-establishing annual rebates that drug manufacturers used to pay the government based on their sales to Medicaid beneficiaries. He said about 7.5 million Medicare beneficiaries fall into the doughnut hole each year.

Although Nelson failed to attach the language to the committee's bill, he said the issue is still very much alive: Senate Majority Leader Harry Reid (D NV) said he would support Nelson's effort to reintroduce the amendment when the reform bill reaches the Senate floor, Nelson said. The House healthcare reform bill has similar provisions.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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