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Medicare Donut Hole Widening

Families USA Warns 13 States Offer No Supplemental Coverage

November 2, 2006

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A consumer group warns that some seniors who depend on the new Medicare prescription drug benefit will find it less helpful in 2007.

Families USA says its analysis shows changes to the plan will affect seniors in the so-called "doughnut hole" -- the coverage gap that Congress designed to make the Medicare Part D program less expensive.

That gap refers to the cutoff in Medicare drug coverage that occurs when a participant's total drug costs reach $2,250. The coverage picks back up again after costs exceed $5,100.

In 13 states next year, there will be no drug plans that offer coverage in the so-called "doughnut hole," the big drug coverage gap in the Medicare Part D prescription drug program, for the top medicines prescribed to seniors, according to the report.

In 2006, there were only four such states, but the number of seniors without access to such doughnut hole coverage will increase from 375,000 to 6.6 million in 2007 - an 18-fold increase.

In the 37 states and the District of Columbia in which plans will continue to offer such doughnut hole coverage, the report says premiums for the lowest-priced Part D plans will increase by 87.4 percent, jumping from a median monthly price of $55.08 in 2006 to $103.20 in 2007 - an increase in annual premiums from $660.96 to $1,238.40.

The report contradicts the Bush administration's claims that in 2007 "there will be more plans with coverage in the (doughnut hole) gap." According to the report, the four states (Alaska, Hawaii, Maine, and New Hampshire) that did not have plans with meaningful doughnut hole coverage in 2006 will be joined by nine additional states (Connecticut, Florida, Massachusetts, Michigan, New York, North Carolina, Rhode Island, Vermont, and Wisconsin) in 2007.

In 2006, the doughnut hole coverage gap begins once a senior has $2,250 in drug costs.

When a senior reaches that threshold, the senior has no coverage until his or her drug costs reach $5,100-a gap of $2,850. In 2007, the gap will increase to $3,051, and it is projected to grow to $5,066 in 2013. While in this coverage gap, seniors continue to pay Part D premiums.

"Drug plan coverage in the doughnut hole will be much scarcer in 2007, and, in those states where such coverage continues to be available, it will be far more expensive," said Ron Pollack, Executive Director of Families USA. "This coverage gap never made sense, and now it is getting worse for seniors who take multiple prescription drugs."

In seven upper Midwestern and Mountain-West states (Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, and Wyoming) that will still have Part D plans that provide doughnut hole coverage for the most commonly prescribed drugs, premiums for the lowest- priced plans will increase by 185 percent, from $38.70 per month to $110.30 per month-annual cost increases from $464.40 to $1,323.60.

Beyond the premium hikes in those seven states, the report says seniors will face steep premium increases in the following states: New Jersey (179.8 percent), Missouri (111.8 percent), Delaware (95.2 percent), the District of Columbia (95.2 percent), Maryland (95.2 percent), Kansas (88.7 percent), Alabama (84.3 percent), and Tennessee (84.3 percent).

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