Health Benefits: Medicare's Costly Doughnut Hole

(page 2 of 2)

Both ideas—dropping drug prices and shifting more of the up-front premiums to members who can afford to pay—have been bandied about in Washington as potential ways of at least shrinking the doughnut hole without the government having to pony up more to support Part D. The prospect of a $700 billion bailout of the financial industry is certainly taking attention away from health-care reform, but there is little doubt the next President will place the doughnut hole high on his agenda.

"There is a growing recognition that the doughnut hole is impairing people's access to medications," says Dr. Carolyn Clancy, director of the Agency for Healthcare Research & Quality in Rockville, Md., a public service agency of the U.S. Health & Human Services Dept.

Premiums Are Set to Jump

Meantime, the doughnut hole is exacerbating a growing Medicare financial burden on seniors. On Sept. 26, health-care advisory firm Avalere Health released a report predicting Part D beneficiaries will see their premiums rise 24% on average, to $37 a month, in 2009. Those who joined the 10 most popular plans will swallow a 30% increase.

"One frustration seniors voice is that they go through the deductible, then they fall into the gap, then a new year comes around and they have to start all over again," says Karen Fletcher, a spokesperson for California Health Advocates, which assists Medicare beneficiaries.

Some drug companies offer assistance programs, Fletcher says, but only for the lowest-income seniors, and only for those willing to endure a tough application process.

Those who watch Part D carefully worry that some patients may be cutting back on their drug intake altogether to avoid the doughnut hole, even if they're endangering their health by doing so.

"Is the program better than what they had before? Yes," says Judy Lave, chair of health policy and management at the University of Pittsburgh, referring to the fact that most seniors had little or no drug coverage prior to Part D. "But can we design it better? Yes."

Weintraub is a senior writer for BusinessWeek's science and technology department.