Many Medicare beneficiaries lack coverage in prescription drug benefit 'doughnut hole'

Sep 22 2006

Eighty-eight percent of Medicare beneficiaries enrolled in stand-alone drug plans under the Medicare prescription drug benefit are in plans that do not provide coverage during the so-called "doughnut hole," according to a report released on Thursday by Democrats on the House Ways and Means Committee, the AP/Boston Globe reports (Freking, AP/Boston Globe, 9/21).

Under the drug benefit, beneficiaries are responsible for 100% of prescription drug costs between $2,250 and $5,100. Medicare drug plans generally cover 75% of drug costs after a $250 deductible up to $2,250, and then 95% of prescription drug costs beyond $5,100 (Kaiser Daily Health Policy Report, 8/15). Beneficiaries can purchase Medicare drug plans that offer coverage during the doughnut hole, though those plans typically include higher premiums, the AP/Globe reports. According to the report, purchasing a plan with coverage during the doughnut hole would increase average annual costs by $458 for beneficiaries enrolled in stand-alone plans. The report does not include data on beneficiaries in Medicare Advantage plans or low-income beneficiaries who qualify for a special subsidy. The report does not estimate how many beneficiaries will reach the doughnut hole.

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Rep. Pete Stark (D-Calif.) said, "As this report shows, the opportunity to purchase plans that fill the hole is a mirage." He added, "Beneficiaries are no more able to afford expensive, full-coverage plans than minimum-wage Americans are able to afford a Mercedes." According to CMS spokesperson Jeff Nelligan, beneficiaries with the lowest incomes do not have coverage gaps. Nelligan said only a small percentage of beneficiaries will have to pay out of pocket during the doughnut hole because of state assistance programs and no-cost medications from pharmaceutical companies' assistance programs (AP/Boston Globe, 9/21).

The report is available online. Note: You must have Adobe Acrobat Reader to view the report.