How Congress and the drug industry created a trap for American seniors and people with disabilities The costly, confusing, and corrupt design of Part D will cause dire health consequences as 7 million Americans fall into a doughnut hole from which few will escape
By Jeff Cruz & Roger Hickey
When Congress created the Part D prescription drug program in 2003, they designed the program to benefit the pharmaceutical industries and their other special interest campaign contributors, rather than for American seniors and disabled people. The resultant drug benefit is needlessly complicated, confusing and costly, forbids Medicare from negotiating lower prices like the Veterans Administration does, and doesn’t allow enrollees the choice of a guaranteed benefit directly from Medicare.
Another major flaw in the design is the coverage gap, known as the doughnut hole, into which about 7 million Americans are expected to fall.1 This directly punishes middle class retirees and disabled people who’ve worked their entire lives and don’t qualify for special poverty assistance, yet still need to live on meager fixed incomes. The median per capita income for retirees is $14,664. Many individuals who hit the doughnut hole are forced to choose between eating dinner and getting their prescription drugs.2 This doughnut hole actually costs taxpayers more money, as those without coverage report worsening health and an increase in emergency hospital visits which are covered by traditional Medicare.
Tragically, mortality rates have increased by nearly 25% where prescription drug coverage has been capped, such as with the doughnut hole.3
The average senior who enrolled in Medicare at the beginning of this year will hit the doughnut hole on September
22. Many individuals will enter the doughnut hole much sooner. Out of those individuals who enter the doughnut hole, which perhaps more appropriately should have been called the black hole, few will have the resources to escape. Those who do manage this feat will quickly be plunged right back into the hole the following year. Unfortunately, the doughnut hole will grow each and every year, worsening its effects.
Congress needs to fill in the doughnut hole by fixing the fundamental flaws in the design of Part D. Legislation, such as the Medicare Prescription Drug Savings and Choice Act, would save enrollees and taxpayers alike by offering a benefit directly from Medicare with negotiated prices. These savings should be used to eliminate the doughnut hole.
3.Introduction/overview of doughnut hole
The 2003 Medicare Modernization Act was created to provide a badly needed prescription drug benefit for American senior and disabled citizens, but it unfortunately included many provisions that are actually harmful to the intended beneficiaries. These misguided provisions include forbidding Medicare to negotiate for lower prices, forcing seniors to choose among private plans without the option of getting a benefit directly from Medicare, and allowing these private plans to change their prices and drugs covered at any time while American seniors and disabled people are not allowed to change their enrollment until the next open season. Another particularly harmful provision was the creation of a coverage gap, known as the doughnut hole, which was included in the fundamental design of the program. The consequences to seniors who fall into the doughnut hole are dire, and in some cases can even be fatal.
Under Part D, standard enrollees will have to pay the first $250 of their medications (in 2006). After this initial deductible, 75% of their drug costs will be covered, leaving the beneficiary to pay the remaining 25%. However, once the total medication costs have exceeded $2,250 (in 2006), the senior or disabled person must pay for their drugs completely out of pocket, while still paying a monthly premium. This is the gap in coverage that is known as the doughnut hole.
Individuals can only escape the doughnut hole if their total drug costs exceed $5,100 (in 2006), when the catastrophic coverage kicks in and 95% of drug costs are covered. But very few Americans who enter the doughnut hole are expected to get out, and those who do will quickly plunge back into it the following year.
This poor design has many consequences for seniors and the disabled. The best case scenario is that it …