Medicare's Doughnut Hole Gets Even Bigger in 2007, Reports Medical Rights Center

Asclepios newsletter says administration brags that the average Part D premium is going down, but it fails to mention that all other out-of-pocket is going up

September 22, 2006 – There is a storm of concern over the millions of senior citizens falling into the "doughnut hole" in Medicare drug plans, which is where seniors continue to pay their premiums but get no help on buying drugs. If it is bad this year, wait until next year when the "doughnut hole" gets even bigger, according to Asclepios, the weekly Medicare consumer advocacy update from the Medicare Rights Center.

Below is this week's issue with information, too, on how you can get this emailed to you free every week.

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The Expanding Doughnut Hole

By now most people have heard that the Part D benefit has a large gap in coverage that often hits people by surprise when they go to the pharmacy and discover they have to pay 100 percent of the cost of their drugs. During this gap, the insurance companies providing Part D still receive monthly checks from plan members and taxpayers, but those companies pay nothing toward covering the prescription drugs of people with Medicare.

Less well known is that the coverage gap is even wider next year. The Bush administration has bragged to the press that the average Part D premium is going down, but it failed to mention that all other out-of-pocket spending is going up. The amount people will have to spend out of pocket before their Part D coverage starts picking up the tab again will rise from $3,600 in 2006 to $3,850 in 2007 (see chart below to learn how the standard Part D benefit changes in 2007).

Worse, that money will buy fewer medicines in 2007 because Part D fails to rein in drug prices. An AARP study found that prices for the prescription drugs most commonly taken by older Americans rose over 6 percent, more than double the cost of living adjustment in Social Security benefits that kick in on January 1. Earlier research found that Part D plans pass on price hikes by pharmaceutical manufacturers nearly dollar for dollar to plan members.

The blame for both trends lies squarely with the Congressional leadership.

Congressional leaders forced through a drug benefit bill with a huge coverage gap. The law makes the gap grow as Part D spending per person grows. And, because Medicare is prohibited from negotiating drug prices, as manufacturers jack up prices, the coverage gap gets even bigger.

Instead of fixing these fundamental flaws with Part D, the Bush administration touts poll numbers that show how people “feel” about their Part D plan. But the same polls that show 80 percent satisfaction rates also reveal that 49 percent of those enrolled in Part D are paying the same amount, and 19 percent are paying more for their prescription drugs than they did before receiving coverage under Part D.

How can a program that will cost taxpayers and people with Medicare $1 trillion over the next 10 years do such a poor job of lowering the prescription drug bills of people with Medicare?

The answer is simple. Part D was designed to benefit the insurance companies that sell Part D plans and the pharmaceutical manufacturers that sell their overpriced medicines, not to be the best benefit possible for people with Medicare. Drugmakers and insurance companies are 100 percent satisfied with Part D because it has added millions to their bottom line.

By way of a thank you, the insurance companies and drugmakers have showered the Bush administration and Congressional leaders with massive campaign contributions. Some lawmakers and top administration officials have since been rewarded with lucrative jobs working for these companies, but others are up for re-election this November. That is when we have the chance to send them looking for employment in the private sector.

Medical Record

“Through the end of the second quarter of 2006, annual increases in manufacturer prices charged to wholesalers and other direct purchasers for widely used brand-name prescription drugs, on average, continued to substantially exceed the rate of general inflation. In addition, the average annual rate of price increase for the 12-month period ending in June 2006 (6.3 percent) is higher than the 6.0 percent average increase for the 12 months ending in December 2005” (“Trends in Manufacturer Prices of Brand-Name Prescription Drugs Used by Older Americans – Second Quarter 2006 Update,” AARP, September 2006).

“The ten largest pharmaceutical companies enjoyed substantial profit increases in the first six months of the new Medicare drug program. In the first half of 2006, profits for these companies increased by over $8 billion, a 27% increase” (“Pharmaceutical Industry Profits Increase by Over $8 Billion After Medicare Drug Plan Goes Into Effect,” U.S. House of Representatives Committee on Government Reform, September 2006).

According to the recently released J.D. Power and Associates 2006 Medicare Part D Beneficiary Satisfaction StudySM , almost 70 percent of individuals enrolled in a Part D plan said they are either paying the same as or more than what they were paying for prescriptions before the benefit (“Three-Fourths of Beneficiaries Enrolled in Medicare Part D Are Satisfied with Their Drug Plan ,” J.D. Power and Associates, September 19, 2006).

Fast Relief: Part D Monitoring Project

The Medicare Rights Center (MRC) needs to hear about all the problems with the Medicare Part D benefit, whether they happen to you or someone in your community. With this information, we will be armed with the needed evidence to push for a Medicare-administered drug benefit.

Submit your story at www.medicarerights.org/partdstories.html

The Louder Our Voice, the Stronger Our Message

Asclepios —named for the Greek and Roman god of medicine who, acclaimed for his healing abilities, was at one point the most worshipped god in Greece—is a weekly e-newsletter designed to keep you up-to-date with Medicare program and policy issues, and advance advocacy strategies to address them. Please help build awareness of key Medicare consumer issues by forwarding this action alert to your friends and encouraging them to subscribe today.

The Medicare Rights Center (MRC) is the largest independent source of Medicare information and assistance in the United States. Founded in 1989, MRC helps older adults and people with disabilities get good, affordable health care.

For the online subscription form to sign up for Asclepios go to http://www.medicarerights.org/subscribeframeset.html.