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The Doughnut Hole
February 5, 2009 • Volume 9, Issue 5
Two new reports published online by the journal Health Affairs this week confirm with hard data what millions of people with Medicare know through hard experience. When people hit the doughnut hole—the infamous gap in the Part D drug benefit when people must pay the full price of their drugs and their Part D premiums—many stop taking their medicines. This is especially true for people with diabetes, people with multiple chronic conditions and people who take expensive brand-name medicines. Experts also know that people who stop taking medicines for diabetes, hypertension and other chronic illnesses can wind up in the hospital.
The Congressional Budget Office estimates it would cost taxpayers $134 billion over the next ten years for Medicare to provide a drug benefit with no built-in coverage gap. The reason why closing the doughnut hole is so expensive is that the cost of prescription drugs is so high.
Interestingly, CBO estimates that taxpayers would save $110 billion over ten years if drug manufacturers had to give the Medicare program the same deal they give the Medicaid program—basically a 15 percent rebate per prescription and a refund to the government for any price increases above the rate of inflation. Based on CBO’s estimates, we could come up with the other $24 billion needed to close the coverage gap by making sure Medicaid HMOs get the same deal on drugs; by ending the tricks manufacturers play to avoid the Medicaid cap on year-to-year price increases; and by using generic biologics under Medicare Part B.
Probably not. Congress may be too focused on covering the uninsured and too afraid of having to fight a multimillion dollar campaign by PhRMA, the drug lobby, to push proposals that would take such a big bite out of the drug manufacturers’ bottom line.
But we should still fight to get Medicare a better deal on the drugs it buys. We should at a minimum recoup the windfall reaped by drug manufacturers when over 6 million low-income people with Medicare were switched from Medicaid to Medicare drug coverage.
And at least some of those savings should go toward improving the drug benefit. Right now, an individual earning just $17,000 per year gets no help paying for drugs when they are in the doughnut hole. If the ceiling for the Extra Help program were extended to 200 percent of the poverty level—$21,660 per year for an individual, $29,140 for a couple—millions more older adults and people with disabilities would have drug coverage with no doughnut hole.
There are other ways to narrow the gap. Some have suggested allowing taxpayer subsidies to cover generics in the gap, rather than making enrollees pay the full cost of gap coverage through a higher premium. That would help some people, although not those who need help buying an expensive brand-name drug while in the coverage gap.
A better alternative is to have Medicare provide drug coverage directly. Medicare would negotiate lower prices and Medicare would decide which drugs—generics and brand-name drugs that provide real clinical benefit—would be covered.
There is no shortage of ideas that could help, but it will take a lot of public pressure to get Congress to stand up to the drug manufacturers. You can start by asking your senators and congressperson to cosponsor the Medicare Prescription Drugs Savings and Choice Act, which provides the option of receiving drug coverage directly through Medicare.
“Not surprisingly, we found that beneficiaries with more than one chronic illness were much more likely than other beneficiaries to reach the doughnut hole: also, beneficiaries with diabetes were more likely to reach it than beneficiaries with hypertension or hyperlipidemia.” (The Effects of the Coverage Gap on Drug Spending: A Closer Look at Medicare Part D, Health Affairs, February 2009)
“A preponderance of evidence indicates that increased patient cost-sharing has a strong effect on overall medication use and adherence to specific therapies. Reduced drug usage as a consequence of reaching a coverage gap has been associated with worse health outcomes.” (The Effect of Medicare Part D Coverage on Drug Use and Cost Sharing Among Seniors without Prior Drug Benefits, Health Affairs, February 2009)
“I have multiple diseases and I find that I am in the doughnut hole long before the year is up! Why can't the program be run like the VA with no cut off on medications that are covered?” (Story Submitted to the Tell Us Your Story Project from Odessa, FL, March 2008)
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Medicare Part D Appeals Help for Advocates Is Here!
Medicare Rights Center’s new Medicare Part D Appeals: An advocate’s manual to navigating the Medicare private drug plan appeals process offers an easy-to-understand, comprehensive overview of the entire appeals process, including real-life case examples, a glossary of important appeals terms, a sample protocol for advocates, and links to important resources.
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Medicare Part D Monitoring Project
would like to hear about your experience, or that of someone you know, enrolled in a private drug plan. With information about what the issues are with Medicare Part D, we will be able to demand that those problems be fixed. Medicare Rights Center
Submit your story at http://www.medicarerights.org/about-mrc/newsletter-signup.php.
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