November 2006
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Filling the Medicare ‘doughnut hole’
Doughnuts and hot cider--a sweet autumn tradition. But this fall, many seniors and people with disabilities have fallen into a “doughnut hole,” the nickname given the notorious gap in coverage under the new Medicare prescription drug law, and it’s anything but sweet.
While millions who struggle to pay for their medications were initially helped by the new Medicare Part D drug benefit, many now find themselves once again without any drug coverage. That’s because Congress opted to stretch its dollars by requiring beneficiaries to pay all the costs of their medicine once they and Medicare spent a total of $2,250. Coverage is resumed after the beneficiary pays another $2,850 out-of-pocket.
While estimates vary on the precise number, it’s clear that millions of people will hit the coverage gap this year. Experience tells us that those without financial help to pay for medicines are often forced to go without drugs, split pills in half, or forgo other basic needs.
But the Medicare doughnut hole can be filled, and without costing taxpayers more money. Consumers Union supports bills in Congress that would let Medicare use its buying power to negotiate with drug companies for lower prices. The savings could be used to ensure continuous drug coverage.
Price negotiation works. The U.S. Department of Veterans Affairs currently negotiates prescription drug prices for its beneficiaries that are, in some cases, half the price available through Medicare.
Some of the proposed congressional bills would also let Medicare offer its own drug plan in addition to the hundreds of private insurance plans that taxpayers now fund through Medicare. A price stable, Medicare-run plan is an important option for seniors on a fixed income, since private plans can increase the prices they charge for drugs at any time while allowing enrollees to change their plans just once a year.
What can seniors do to afford medicines until Congress acts? Doctors can often prescribe effective alternatives to high-priced drugs. For example, switching from prescription brand-name Lipitor to prescription generic lovastatin for cholesterol problems could save some consumers $60 to $90 a month.
Consumers Union’s free education project, Best Buy Drugs, identifies lower-cost, effective drugs in 15 categories. The project’s reports give unbiased information on effectiveness, safety, and cost. You’ll find other ways to lower your drug costs in our generic drugs report.
But consumers can’t do it alone. Congress must do its part by giving Medicare the authority to negotiate lower drug prices with the pharmaceutical industry, saving seniors and taxpayers billions of dollars, and by filling the doughnut hole, guaranteeing continuous drug coverage for those who need it most.
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