Democrats: Filling the doughnut hole is expensive for seniors

Thursday, September 21st 2006, 12:15 pm
By: News On 6

WASHINGTON (AP) _ Filling the doughnut hole in Medicare drug plans would cost seniors and the disabled about $40 a month more.

Democratic lawmakers estimated the additional cost and said Thursday that it's a major reason why 88 percent of the Medicare beneficiaries signing up for drug plans opted for a coverage gap.

They designated Friday as ``doughnut hole day,'' when the coverage gap would hit the average senior taking several medications.

``This gap in coverage doesn't have to exist. This was a conscious choice, based on a value system, that put drug companies ahead of our seniors and people with disabilities,'' said Sen. Debbie Stabenow, D-Mich.

The Bush administration estimates that about 3 million Medicare beneficiaries will hit the doughnut hole, fewer than the 7 million often cited by critics. Mark McClellan, the administration's pointman on Medicare, says the 7 million figure is outdated.

Under the standard Medicare plan, the government subsidizes the drug costs for seniors and the disabled. But after costs reach $2,250, the subsidy stops until a beneficiary has paid $3,600 of his or her own money. Then, the government will start picking up 95 percent of each purchase.

But beneficiaries go back to square one with each new year, and could face the doughnut hole repeatedly over the ensuing years.

And beneficiaries must pay the monthly premium even while they are in the doughnut hole.

Those qualifying for a low-income subsidy are not included in the Democrats' estimate of those facing hardship, nor are those who enrolled in Medicare Advantages programs, which work like an HMO.

McClellan, administrator of the Centers for Medicare and Medicaid Services, emphasized that beneficiaries who fall into the gap got a lot of government assistance beforehand.

``If you reach the doughnut hole, you've already gotten $1,500 or more worth of help with your drug costs,'' McClellan said. ``That's a lot of money that you can use for paying for basic necessities or for paying for enhancing your health insurance coverage.''

According to the Democrats, it would cost $458 a year on average to switch to a plan that had full coverage. But that figure varies from state to state. Residents of New Jersey, for example, would have to pay, on average, an additional $298. The highest additional premium _ $721 _ would hit beneficiaries in seven states: Iowa, Minnesota, Montana, North Dakota, Nebraska, South Dakota and Wyoming.

``As this report shows, the opportunity to purchase plans that fill the hole is a mirage,'' said Rep. Pete Stark, D-Calif. ``Beneficiaries are no more able to afford expensive, full-coverage plans than minimum-wage Americans are able to afford a Mercedes.''

At a news conference, Rep. Janice Schakowsky, D-Ill, read a letter from a constituent, Pauline Metzger-Aronson of Morton Grove, Ill.

``All I know is that last month what I paid $20.00 for cost me $96.12 this month, and that was only on one prescription. What adds insult to injury is that we must now also pay the premium while we lose our benefits,'' Metzger-Aronson wrote.

McClellan said seniors approaching the coverage gap should keep using their Medicare drug card because it means the consumer can get the plan's discount. He also said they should contact the drug companies that make their medicine, as well as their state, to see if they qualify for assistance programs. Twenty-one states offer such programs, as do many of the major drug manufacturers.

Democrats contend that one solution to filling the doughnut hole would be to let the government negotiate drug prices on behalf of beneficiaries, instead of having fragmented insurance companies doing that. Then, the government could use the savings achieved to do away with the gap.

But McClellan said it would cost the government an additional $500 billion over 10 years to fill the gap.