Filling the Doughnut Hole
Several million seniors soon will begin hitting the dreaded doughnut hole in their new Medicare prescription drug coverage – a gap of up to $3,000 where their insurance stops.
There already are calls for Congress to fill the gap or to completely change the drug program to make it look more like the rest of Medicare. Changing the program now would be a mistake since polls show that seniors like the new plan. The Kaiser Family Foundation reported that more than eight in 10 seniors who are enrolled are satisfied with the plan they picked, that their initial experiences have been positive, and three of four would pick the same plan again.
But more and more seniors are going to start experiencing problems this fall if they have high drug costs. If they picked a standard plan, their drug coverage will stop after they have $2,250 in drug bills, and it won’t pick up again until their bills top $5,100. Expect to see headlines that say, "Medicare beneficiaries confused and angry over gap in drug coverage."
The doughnut hole is indeed a problem, and no insurance company would have designed a policy like this one created by Congress with a coverage gap and confusing trigger points. Seniors don’t like surprises, and they really don’t like learning that they must continue to pay insurance premiums when their drug coverage has stopped.
Drug plans have been very creative in using the flexibility the Medicare agency gave them to offer plans with coverage in the gap, and 72% of seniors are in these plans. Only a fraction of seniors -- an estimated 3 to 3.5 million of them -- are expected to fall into the doughnut hole this year, but they do need options.
Medicare Administrator Mark McClellan advises that seniors often can reduce their costs by switching to generic drugs and by taking advantage of assistance programs offered by many states and by drug manufacturers. When they hit the gap, beneficiaries also have access to drug discounts negotiated by their plans, and they can clearly see the prices they'll pay at www.medicare.gov.
A New York- based think tank, the Center for Medicine in the Public Interest, has a new website, www.partdoptimizer.com, that lets seniors find lower-cost options to the drugs they are taking. So far, more than 850,000 people have used this tool and have saved an average of $900 on their medicines.
Further, lower-income people who are eligible for both Medicare and Medicaid have no gap in their benefit. They can sign up for a special program that takes care of their premium costs and offers seamless coverage. And they can enroll in a drug plan anytime, without penalty, starting with a visit to their local Social Security office.
In addition, most of the major drug companies are negotiating with the Medicare agency to get approval for private patient assistance plans to offer coverage seniors who have hit the gap.
There are bizarre and counter-productive federal laws already on the books that could make the companies subject to anti-kickback and fraud and abuse laws if they give their drugs away to seniors who have hit the gap. Government lawyers say that this could be an unfair inducement for seniors to take their drugs.
Only in Washington.
In addition, at least 28 states also have pharmaceutical assistance programs that are compatible with Medicare. Seniors can find information at www.statehealthfacts.org States have proposed several ways to use state funds to coordinate benefits including providing "wrap around" benefits to supplement Medicare Part D coverage.
Further, seniors can start searching now for other options to change plans during the open-season sign-up period, which starts this November 15. The majority of the free-standing Medicare drug plans do offer coverage in the gap. In addition, seniors can choose the new Medicare Advantage plans that offer full-service health coverage, including prescription drugs and generally including gap coverage.
These are growing pains, not fatal flaws, for the new Medicare prescription drug program that impacts 42 million people. It's been nearly three years since the hot summer when the House and the Senate debated and then finally passed bills to create the new Medicare prescription drug benefit.
It's going to take time for seniors, companies, and the government to figure out a new system that involves choice and competition, and that calls on seniors to make informed choices to get the drugs and the plans that suit them best.
Grace-Marie Turner is president of the Galen Institute, a non-profit research organization that focuses on free-market ideas for health reform. She can be reached at P.O. Box 19080, Alexandria, VA, 22320 or galen@galen.org.
