The Star-Ledger

Medicare Gap Hits Seniors In The Wallet

Elderly falling into the 'doughnut hole'

The Star-Ledger — Thursday, July 13, 2006

Star-Ledger Staff

The Medicare Part D prescription drug plan has thrust Anne McBride into the "doughnut hole."

The 80-year-old retired English teacher now must pay for all her medications, even though she remains covered by her new Medicare prescription drug plan and still pays her monthly premium.

McBride has entered the coverage gap known as the doughnut hole.

"This happened sooner than I thought," said McBride, of Moorestown. "At the beginning, Part D seemed wonderful. But now I don't know."

Even seniors who understand the coverage gap are expressing anger as they come face-to-face with the consequences of the doughnut hole.

This aspect of the new federal prescription drug plan is sparking political debate.

The Institute for America's Future distributed a report yesterday that said 7 million Americans will fall into the coverage gap, including 195,000 in New Jersey. The group said the average Medicare Part D recipient will hit the doughnut hole on Sept. 22. About 42 million Americans are on Medicare, and some 22 million have prescription drug plans.

The liberal think tank released a report calling for changes in Medicare at a teleconference with New Jersey Citizen Action and U.S. Rep Frank Pallone (D-6th Dist.).

"We want Medicare to negotiate drug prices the way the VA (Veterans Administration) does. Many seniors can't imagine paying a premium and all (of a) sudden not getting any benefit," Pallone said.

A spokesman for America's Health Insurance Plans, a trade association based in Washington, D.C., disputed the figures, and cited a June 8, 2006, report by PriceCoopersWaterhouse that said 3.4 million Americans will fall into the coverage gap.

"Citizen Action misuses older estimates of Medicare beneficiary spending before the program was implemented to create an artificial deadline of September 22 during this election year," said the association's spokesman, Mohit Ghose.

The doughnut hole is one of the more complex aspects of the nation's new Medicare prescription drug program, which took effect for the first time this year. Drug coverage stops when participants reach the threshold of $2,250 worth of prescription drugs. The total is based on the actual cost of the drugs, not on what the participant pays under the plan.

Catastrophic coverage kicks back in only when, and if, the participant spends $3,600 on drugs out of his or her own pocket within the same calendar year. Then, Medicare pays 95 percent of drug costs.

Jeff Cruz of the Institute for America's Future said most seniors who fall into the coverage gap will never reach the point of catastrophic coverage.

Melba Heck may hit catastrophic coverage just as the year ends.

The Old Tappan woman takes medications for osteoporosis, high blood pressure and cholesterol. She took Plavix earlier this year after doctors put a stent into her heart.

Her AARP Medicare RX plan recently alerted her that she is $120 away from the coverage gap, she said.

"My osteoporosis medicine will put me right into the doughnut hole," said the 76-year-old woman. "And I will have to spend $2,596.34 out of my own pocket before I qualify for catastrophic coverage."

She expects she will reach that amount just as the year ends. On Jan. 1, she will start all over again.

"I feel like the government put one over on the people," she said. "I see these commercials and people are saying, 'I'm saving! I'm saving!' What planet are these people on?"

More than 1.2 million people in New Jersey are Medicare beneficiaries, and some 363,000 signed up for Part D stand-alone plans. Another 80,000 joined Medicare Advantage plans, which are managed-care-style health plans that include prescription drug coverage.

New Jersey has 44 stand-alone plans. One includes coverage for generic and brand-name drugs through the doughnut hole, while five others provide generic doughnut hole coverage.

Some say seniors can avoid the doughnut hole by purchasing these plans, but critics said these plans can be more costly because of higher premiums and reduced drug coverage.

Critics also note that poor Medicare beneficiaries have full coverage through the gap and lower-income Americans are eligible for subsidies.

Jeffrey Hall, a spokesman for the U.S. Centers for Medicare and Medicaid Services, said people in the coverage gap will still get discounts for using their Part D card. He also said beneficiaries can avoid reaching the coverage gap by switching to generics or less expensive brand-name medicines.

Hall said beneficiaries in the coverage gap should continue to use their cards so Medicare can keep track of their purchases and determine if they qualify for catastrophic coverage.

Carol Ann Campbell covers medicine.

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