Report on Medicare Drug Program 2007 Finds Less Donut Hole Coverage, Big Premium Jumps in Plans that Do

November 1, 2006 - In 13 states next year, there will be no drug plans that offer coverage in the so-called "doughnut hole," the drug coverage gap in the Medicare Part D prescription drug program, for the top medicines prescribed to seniors, according to a new report issued today. In 2006, there were only four such states, but the number of seniors without access to such doughnut hole coverage will increase from 375,000 to 6.6 million in 2007 - an 18-fold increase.

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In the 37 states and the District of Columbia in which plans will continue to offer such doughnut hole coverage, premiums for the lowest-priced Part D plans will increase by 87.4 percent, jumping from a median monthly price of $55.08 in 2006 to $103.20 in 2007 (an increase in annual premiums from $660.96 to $1,238.40).

The report, issued by the health consumer watchdog organization Families USA, contradicts the Bush administration's claims that in 2007 "there will be more plans with coverage in the (doughnut hole) gap." According to the report, the four states (Alaska, Hawaii, Maine, and New Hampshire) that did not have plans with meaningful doughnut hole coverage in 2006 will be joined by nine additional states (Connecticut, Florida, Massachusetts, Michigan, New York, North Carolina, Rhode Island, Vermont, and Wisconsin) in 2007. (See chart at right)

In 2006, the doughnut hole coverage gap begins once a senior has $2,250 in drug costs. When a senior reaches that threshold, the senior has no coverage until his or her drug costs reach $5,100 - a gap of $2,850. In 2007, the gap will increase to $3,051, and it is projected to grow to $5,066 in 2013. While in this coverage gap, seniors continue to pay Part D premiums. (See chart below story)

Table 2

Medicare Beneficiaries with No Access to Stand-Alone Drug Plans that Offer Meaningful Coverage through the Doughnut Hole, by State, 2006 and 2007

"Drug plan coverage in the doughnut hole will be much scarcer in 2007, and, in those states where such coverage continues to be available, it will be far more expensive," said Ron Pollack, Executive Director of Families USA. "This coverage gap never made sense, and now it is getting worse for seniors who take multiple prescription drugs."

In seven upper Midwestern and Mountain-West states (Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, and Wyoming) that will still have Part D plans that provide doughnut hole coverage for the most commonly prescribed drugs, premiums for the lowest- priced plans will increase by 185 percent, from $38.70 per month to $110.30 per month-annual cost increases from $464.40 to $1,323.60.

Beyond the premium hikes in those seven states, seniors will face steep premium increases in the following states: New Jersey (179.8 percent), Missouri (111.8 percent), Delaware (95.2 percent), the District of Columbia (95.2 percent), Maryland (95.2 percent), Kansas (88.7 percent), Alabama (84.3 percent), and Tennessee (84.3 percent).

According to the report, in 2006, there were approximately 375,000 Medicare beneficiaries in the four states that had no Part D plan that had doughnut hole coverage for the top medicines prescribed to seniors. In 2007, with the addition of nine more states, that number will grow to more than 6.6 million beneficiaries-almost 18 times more than in 2006.

Of the top 25 drugs prescribed to seniors, 18 have no generic substitute. As a result, the Families USA report focuses on Part D stand-alone drug plans that provide doughnut hole coverage for brand-name as well as generic drugs.

The overwhelming majority of Medicare beneficiaries receiving drug coverage are in the stand- alone plans because such plans enable seniors to stay in traditional Medicare so that they can retain their choice of doctors.

(See chart of changes by state below news report.)

Data for the Families USA report were derived from the Centers for Medicare and Medicaid Services (CMS). In its "Landscape of Plans," which is available online at http://www.medicare.gov , CMS identifies all Part D plans that provide coverage for all formulary drugs in the doughnut hole in 2006 and 2007. In states where more than one such plan was available, Families USA reported on the plan with the lowest monthly premium for that year.

Editor's Notes:

For a copy of the report and to review the methodology, visit http://www.familiesusa.org .

Families USA is a national organization for health care consumers. It is a nonprofit, nonpartisan organization that advocates for "high-quality, affordable health care for all Americans."

Year	Initial Coverage Limit (Doughnut Hole Begins)	Catastrophic Threshold (Doughnut Hole Ends)	Overall Coverage Gap (Size of Doughnut Hole)
2006	$2,250	$5,100	$2,850
2007	$2,400	$5,451	$3,051
2013*	$4,000	$9,066	$5,066

Sources: 2006 and 2007 data are from the Centers for Medicare and Medicaid Services (CMS), Office of the Actuary, Medicare Part D Benefit Parameters for Standard Benefit: Annual Adjustments for 2007 (Washington: CMS, May 22, 2006), available online at http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/downloads/2007_Part_D_Parameter_Update.pdf. 2013 projection by the Congressional Budget Office, A Detailed Description of CBO’s Cost Estimate for the Medicare Prescription Drug Benefit (Washington: Congressional Budget Office, July 2004), p. 9. *Projection.

Table 3 Lowest Monthly Premiums for Stand-Alone Drug Plans with Meaningful Coverage through the Doughnut Hole, by State, 2006 and 2007
State	Lowest Monthly Premium 2006	Lowest Monthly Premium 2007	Percent Increase 2006 to 2007
Alabama	$67.16	$123.80	84.3%
Alaska	No Plan	No Plan	–-–
Arizona	$53.54	$78.10	45.9%
Arkansas	$58.97	$93.20	58.0%
California	$50.91	$74.80	46.9%
Colorado	$54.89	$73.00	33.0%
Connecticut	$55.08	No Plan	–-–
Delaware	$52.88	$103.20	95.2%
District of Columbia	$52.88	$103.20	95.2%
Florida	$61.70	No Plan	–--
Georgia	$73.17	$96.40	31.7%
Hawaii	No Plan	No Plan	–--
Idaho	$52.08	$73.50	41.1%
Illinois	$61.51	$106.00	72.3%
Indiana	$66.89	$108.30	61.9%
Iowa	$38.70	$110.30	185.0%
Kansas	$54.20	$102.30	88.7%
Kentucky	$66.89	$108.30	61.9%
Louisiana	$69.92	$110.40	57.9%
Maine	No Plan	No Plan	–-–
Maryland	$52.88	$103.20	95.2%
Massachusetts	$55.08	No Plan	–--
Michigan	$65.15	No Plan	–--
Minnesota	$38.70	$110.30	185.0%
Mississippi	$62.12	$103.00	65.8%
Missouri	$56.43	$119.50	111.8%
Montana	$38.70	$110.30	185.0%
Nebraska	$38.70	$110.30	185.0%
Nevada	$49.59	$84.30	70.0%
New Hampshire	No Plan	No Plan	–-–
New Jersey	$48.50	$135.70	179.8%
New Mexico	$59.77	$72.80	21.8%
New York	$47.93	No Plan	––
North Carolina	$65.03	No Plan	–--
North Dakota	$38.70	$110.30	185.0%
Ohio	$63.91	$95.90	50.1%
Oklahoma	$57.85	$96.50	66.8%
Oregon	$51.18	$75.00	46.5%
Pennsylvania	$58.46	$104.50	78.8%
Rhode Island	$55.08	No Plan	––
South Carolina	$68.74	$104.20	51.6%
South Dakota	$38.70	$110.30	185.0%
Tennessee	$67.16	$123.80	84.3%
Texas	$58.69	$96.50	64.4%
Utah	$52.08	$73.50	41.1%
Vermont	$55.08	No Plan	–--
Virginia	$58.18	$92.20	58.5%
Washington	$51.18	$75.00	46.5%
West Virginia	$58.46	$104.50	78.8%
Wisconsin	$57.21	No Plan	–--
Wyoming	$38.70	$110.30	185.0%
Median U.S. Premium	$55.08	$103.20
Percent Increase in Median U.S. Premium			87.4%

Source: Centers for Medicare and Medicaid Services (CMS), Landscape of Medicare Prescription Drug Plans source file, 2006 and 2007, available online at www.medicare.gov.

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