Total spending by Medicare beneficiaries for prescription drug coverage would fall under the health care reform bill proposed by the House of Representatives, according to estimates from the Congressional Budget Office (CBO). The New York Times reports that CBO is estimating that premiums would rise, but overall spending would fall.

Although premiums would rise, total spending by beneficiares would decline. One reason that costs would fall is the closing of the “doughnut hole” in prescription drug coverage. Under the current program, drug coverage stops when a beneficiary’s spending exceeds $2,510 in a given year; at that point, you pay 100 percent of costs up to $4,500, when so-called “catastrophic coverage” kicks in. HR 3200 would gradually phase out the coverage gap over a 14-year period. The House  bill requires discounts on brand name drugs dispensed in the “doughnut hole” during the period it is being eliminated.

CBO also notes that drug companies would be required to provide bigger discounts on drugs to low-income people enrolled in Medicare and Medicaid.

Premiums for Part D prescription drug plans would rise an average of 5 percent in 2011 beyond what had been expected, rising to 20 percent in 2019, according to the CBO estimate.

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