WASHINGTON—With its troubled launch and frantic final enrollment drive now history, the Medicare prescription-drug program is bracing for what could be its most significant public-relations hurdle yet.
In coming months, millions of older Americans and people with disabilities will face a lapse in coverage known as the "doughnut hole" once their annual drug spending hits $2,250. At that point, Medicare drug plans stop paying for medications and require members to absorb another $3,600 in out-of-pocket costs before coverage resumes. And even while the plans aren't paying for their drugs, participants must continue to pay their monthly premiums.
Of the 11.8 million Medicare enrollees whose plans include a coverage gap, the Kaiser Family Foundation had estimated that 6.9 million of them could hit the doughnut hole, but a staff researcher said that number probably would be higher because of higher-than-expected enrollment.
Federal actuaries at Medicare, however, had said the number would be around 5.3 million, but they now say that figure is too high because of cheaper medications and strong enrollment in plans with no coverage gaps.
Time will tell who's right. But because the overwhelming majority of Medicare plans include a doughnut hole, experts say it's a safe bet that millions of seniors on fixed incomes will be struggling to pay for the life-sustaining medications they need but can't afford without coverage.
The timing couldn't be worse for the Bush administration and congressional Republicans who've spent most of the year defending the new benefit. In the heart of the summer and fall election season, throngs of seniors stuck in the doughnut hole will have a new ax to grind.
"You're likely to get a lot of folks hitting that doughnut hole after Labor Day and sometime right in front of the election, and that will certainly provide fodder for those who have criticized the benefit for not being generous enough," said Michael Frank, the vice president for government relations at the Heritage Foundation, a conservative research center.
Medicare administrator Mark McClellan defended the design, saying people who reached the gap already had saved more than $1,500 on their drugs through the benefit. He said plans must notify members how close they were to hitting the coverage gap in monthly statements.
Some enrollees can avoid the doughnut hole altogether by using cheaper generic drugs instead of brand-name medications. And once they reach the gap, McClellan said, they can still purchase drugs at the discounted Medicare price, which is lower than the retail price.
Medicare plans that offer coverage in the doughnut hole are available nationwide, but are more expensive. As a result, only 10 percent of private plan enrollees and 27 percent of Medicare HMO members enrolled in such plans.
Last year, Frank Furfaro of Patchogue, N.Y. had drug coverage through his Medicare managed-care plan that he felt was adequate. But when his plan adopted the new Medicare-drug benefit, things changed. First, his premiums increased. Then he noticed that the plan covered fewer of the drugs he took.
Furfaro, a disabled heart-transplant patient, found out that he'd hit the doughnut hole last month when he tried to fill a prescription for two immunosuppressant medications. Instead of two $25 co-pays, the pharmacist charged him $661 and $329 for the prescriptions.
"I threw a fit," he said. "What am I supposed to do? I don't have $661 in my pocket." Furfaro said he wasn't told about the doughnut hole when his Medicare HMO changed its coverage in January.
Furfaro, 47, left the pharmacy empty-handed, thinking that without his drugs he was going to die.
"I thought, `That's it. It's over.' The three years I put into the transplant, the waiting and everything. It was a waste of time because I can't get my medicine."
His father helped him purchase the cheaper drug of the two. But Furfaro has gone more than three weeks without the other drug, the one that helped him overcome severe organ rejection after the transplant in 2001. Disabled since 2001 and living off a monthly Social Security Disability Insurance payment of $1,171, he recently took a job as a security guard to earn money for his medications.
He's already feeling weaker and tired. "I lay around a lot. I don't have a lot of energy. I'm short of breath. I don't feel well at all," he said.
If his health deteriorates further, Furfaro said, he'll just get admitted to a hospital and receive his medicine that way, as Medicare will pay all bills if he's hospitalized.
That scenario will be duplicated at hospitals nationwide once more people hit the doughnut hole, said Bob Hayes, the executive director of the Medicare Rights Center, a New York-based advocacy group.
"Millions of people and millions more family members are going to be experiencing this shocking and crushing problem," Hayes said. "That's what happens when people can't get the basic care they need. And medicine is basic care."
Born of politics and tight money, the Medicare doughnut hole is a strange compromise between lawmakers who wanted to limit the cost of the program and those who wanted it to cover as many people as possible.
Critics say that if Congress had allowed the government to negotiate drug prices, the Medicare program could've used the savings to provide coverage with no interruptions.
As it stands, the doughnut hole stands is an insurance industry anomaly.
"It's not something we've ever seen in any other insurance product that I'm aware of," said Juliette Cubanski, principal policy analyst at the Kaiser Family Foundation.
Some assistance is available for beneficiaries who are wrestling with the doughnut hole, but resources and funding are limited. For instance, some states, such as Pennsylvania, provide assistance for low- to moderate-income seniors who hit the coverage gap, McClellan said.
Organizations such as the National Patient Advocate Foundation, the National Organization of Rare Disorders, the HealthWell Foundation and the Patient Access Network Foundation provide similar assistance for certain illnesses.
A coalition of drug makers led by Johnson & Johnson is working with Medicare to come up with a stopgap assistance program to help low- to moderate-income enrollees pay for their medications when they hit the coverage gap.
David Martin, the president of Johnson & Johnson Health Care Systems, said the group wanted the proposed cash assistance to help meet plan members' $3,600 spending requirement.
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(c) 2006, Knight Ridder/Tribune Information Services.
PHOTOS (from KRT Photo Service, 202-383-6099): MEDICARE-DRUGS
GRAPHIC (from KRT Graphics, 202-383-6064): 20060519 MEDICARE DRUGS
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