DUNKING THE "DOUGHNUT HOLE"
November 3, 2006
A new report by Families USA claims the Medicare Part D prescription drug plans are either too costly, or the coverage too skimpy. They object to the so-called "doughnut hole" in many of the plans. Under a standard plan, after the $265 deductible is met, insurance pays 75 percent of costs over the next $2135. Then, seniors are responsible for covering all costs until total spending reaches $5,451. After that, insurance pays 95 percent of drug costs.
Once the deductible has been met, a senior with high prescription drug bills will only spend $3,850 out-of-pocket before Medicare covers 95 percent of additional costs in any given year. With the standard plan costing less than $30, most chronically ill seniors can expect to spend no more than $350 per month on their drug plan, including co-payments and premiums. Not a bad deal for someone who might pay $600 or more per month without the coverage.
Despite the criticisms, there are very good reasons for having a doughnut hole. It holds down the cost to taxpayers. Removing the gap would cost $400 billion over the first decade and even more in future decades.
Another reason is to give seniors an incentive to be prudent consumers of prescription drugs and get them to help support the program financially. Another reason for the doughnut hole is to make the drug plans more affordable. If benefits were too lavish, premiums would have to be higher, which would drive away healthier seniors with lower drug spending.
In reality, there is a plan designed to fit just about every senior's budget. Critics decry the number of choices and the "complicated" plans, but there is no way to design a single plan that will cover everyone who needs it. Seniors who use few drugs do not want to have to pay for coverage they won't use. Seniors who are chronic care patients still deserve the right to choose how they spend their money and whether to use brand-name prescriptions or generic.
Tools are available to help beneficiaries decide which plan would work best for them. The Medicare.gov Web site also provides information on possible therapeutic substitutes that cost less.
The Web site also lists each drug plans' annual cost for drugs, co-pays and premiums for a senior taking the particular drug regimen. The Web site even assists with monthly cash flow management. Based on the drug regimen entered, the Web site breaks down the combined cost each month for premiums, co-payments and cost-sharing.
Recently the news has been filled with articles about seniors being blind-sided by high drugs bills after they reached their initial coverage gap. Yet, unless their medication changed during the year, these seniors should have known last January what their costs were going to be in the fall.
All things considered, the Medicare Prescription Drug program has been a resounding success. The majority of seniors are satisfied with their coverage and saving money to boot.
Read Christopher Lee's article in the Washington Post:
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