PHOENIX
November 16, 2009 —
As the push
to overhaul the nation’s health care system moves to the
U.S. Senate, strengthening the Medicare prescription
drug benefit — Medicare Part D — is emerging as one of
the highest priorities for older seniors. Probably no
aspect of the Medicare Part D program has caused more
confusion and irritation than the notorious “doughnut
hole,” where prescription drug coverage stops but
monthly premiums do not.
Your Medicare
Part D prescription drug coverage has a phase when you
are responsible for all of your prescription drug costs.
This interval is called the “coverage gap” or “doughnut
hole.”
In the odd
structure of Medicare Part D, there is an initial $295
deductible, which means you are responsible for all of
your prescription drug costs until they exceed $295.
After you have spent $295, you pay 25 percent of your
prescription drug costs until your total spending
reaches $2,700.
When your
drug costs total $2,700 you reach the infamous doughnut
hole and, even though you are still required to pay your
Medicare Part D premiums, you generally are responsible
for all of your prescription drug costs until your total
drug spending reaches $6,154. At that point you enter
catastrophic coverage and begin getting help with your
prescription drug costs again. You are responsible for 5
percent of your prescription drug costs after you reach
catastrophic coverage.
Drug prices rise
Prescription drugs play a vital role in managing or
curing diseases and improving the quality of life for
Americans of all ages. Unfortunately the doughnut hole
results in prescription drug costs that many of our
seniors cannot afford. Last year, 33 percent of
seniors on Medicare Part D fell into the dreaded
doughnut hole — that’s nearly 22,000 seniors who had
to pay 100 percent of their prescription drug costs for
at least part of the year, and this number is increasing
each year.
The
doughnut hole is getting worse each year because the gap
in coverage is tied to Medicare Part D beneficiaries’
prescription drug spending. Drug prices continue to
climb despite lack of growth in the general inflation
rate. In fact, according to a recent study by the AARP
Public Policy Institute, the price of brand-name
prescriptions most widely used by Medicare beneficiaries
increased by 9.3 percent in the past year and was much
higher than the rate of increase during any of the prior
seven years. As a result, the doughnut hole is expected
to almost double in size by 2016.
AARP
applauds Sen. Max Baucus for his leadership on a
provision that would substantially fill in the doughnut
hole. Under the Baucus plan, drug makers have committed
to $80 billion in savings — including providing a 50
percent discount on brand name drugs for people caught
in the doughnut hole. (1)
Fight continues
Unfortunately, many seniors who fall into the coverage
gap stop taking their medications because they simply
cannot afford them. For those who do not have a choice
to switch to generic pharmaceuticals, however, this
provision is a major win that will help ensure that they
can afford the prescription drugs they need.
AARP
endorsed the House plan in part because it closes the
dreaded Part D doughnut hole and allows Medicare to
negotiate lower drug prices for Part D beneficiaries.
While AARP
is pleased to see these important steps forward, we know
the fight is not over. We will continue to work with
Baucus to ensure any final health care reform bill meets
the needs of older Americans. AARP will continue to
advocate for lower prescription drug prices and the
complete closure of the Medicare Part D doughnut hole so
that every American can afford the prescription drugs
they need to stay healthy. (2)
(1)
(2)
