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Suffering from asthma, emphysema, and a bad back, Barbara Slawson eagerly signed up for the new Medicare Part D drug benefit. For a premium of $69 a month, she bought a Blue Cross policy that let her buy generic drugs for just $5 and brand-name medications for $38.
Then in late March, the Macedon (N.Y.) resident fell into what congressional staffers dubbed the "doughnut hole," and her insurance was cut off. Under Part D, once total drug spending hits $2,250, coverage ends and seniors must pay for their medicine themselves. Their benefits resume only after they shell out $5,100 -- a $2,850 gap.
Although policymakers were aware of the doughnut hole when they passed the law, many seniors are stunned. "It came up all of a sudden," Slawson says. "My medications were covered. Then I hit the hole, and they weren't."
About 38% of Medicare beneficiaries are at risk, reckons Bruce Stuart, director of the Peter Lamy Center on Drug Therapy & Aging at the University of Maryland. This means 7 million to 10 million seniors and disabled could lose coverage for part of this year.
Many will stumble into the gap in late summer or early fall -- just before the November elections. This could be bad news for Republicans, who pushed the Medicare drug law. According to an Apr. 6-9 Washington Post/ABC News poll, just 41% of seniors approve of the program today. If many face a gap in coverage, that support could plummet. "There will be a lot of angry people -- and they'll be very negative toward the politicians," says Robert J. Blendon, a professor at Harvard University School of Public Health.
Seniors such as Slawson fall into the hole because they take many costly drugs. But it took just one to push in Bob and Marge Naylor of Covina, Calif. Bob takes Betaseron to treat multiple sclerosis, and it costs him up to $800 a month. He's now in the gap, and when he fills his next prescription, he may have to pay as much as $3,400 for a three-month supply.
Why did Congress invent such a mess? Lawmakers first decided they wouldn't spend more than $400 billion over 10 years. Then they wanted to cover those with high drug costs. They also wanted to do something for ordinary seniors. That left nothing for those whose spending falls in the middle. "They had to make it look good for people who don't use many drugs, and with that $400 billion limit, they pretty quickly ran out of money," says Joseph R. Antos, a health economist at the American Enterprise Institute, a conservative Washington think tank.
Not everyone is at risk. Very poor seniors get full insurance. So do most of those covered by former employers. And insurers can fill in the gap, though usually only with generic drugs. About 13% of Medicare plans offer coverage in the hole. But seniors pay for that extra protection. In Maryland the monthly premium for Humana Inc.'s (HUM
) basic drug plan is $6.44. A policy that fills the gap costs $52.88.
Many health experts worry that those who lose coverage, even temporarily, will skip dosages or not fill prescriptions at all to save money. That could make them sicker in the long run. "It is pretty clear that people are going to cut back when they are in the doughnut hole," Stuart says. Others may try to buy cheap drugs from Canada or shop for lower prices online or at chain discount stores. But that can be a bad idea, because if they buy from a pharmacy that doesn't take their insurance, the spending doesn't count toward the $5,100 level that gets them out of the hole again.
Major drugmakers, smelling a round of bad publicity once seniors start falling into the gap, are considering special discounts for those who lose coverage. But they have not yet figured out a way to offer them. So for now, millions of unsuspecting seniors, who thought they were buying a full year's worth of drug insurance, are about to have a nasty surprise. By Howard Gleckman