In this issue brief from The Century Foundation, Senior Fellow Beverly Goldberg examines the shortfalls in the program and the problems senior citizens are encountering as a result of the gap, known as the “doughnut hole,” which opens up when the participant spends more than the year’s covered amount—$2,510 in 2008—on medications. Once that cap is reached, the costs of additional medications must be paid for out-of-pocket until a second threshold is reached. That could cost a Medicare recipient as much as an additional $3,216 in 2008. At that point, the plan again begins to cover needed drugs under a catastrophic coverage provision.

The gap is creating more problems for seniors this year than ever before because of the state of the economy: some 25 percent of seniors enrolled in these plans have already fallen into the hole, resulting in many seniors having to choose between medications, heat, food, and utilities. In Help, I’ve Fallen into the Doughnut Hole and I Can’t Get Up: The Problems with Medicare Part D, Goldbergreveals that once they fall into the doughnut hole some 20 percent of seniors stop taking their medications altogether or reduce their dosage. Unfortunately, most of the medications seniors take are aimed at controlling chronic conditions, such as diabetes, high blood pressure, and high cholesterol, all of which can lead to serious trouble if left untreated.

Goldberg presents a number of ways to relieve some of the problems inherent in the program as currently structured, for example:

• When it comes to patients who have reached the coverage gap, physicians should switch them to generics whenever possible and prescribe pills in larger doses and instruct patients to split them in two when safe.
• To lower the costs of medications, which would prevent many from reaching the cap, the Secretary of Health and Human services could be charged with negotiating with pharmaceutical companies for better prices on drugs. This change has met with strong resistance from the pharmaceutical companies and the administration despite evidence that United States pays prices 70 percent higher for the same drugs than do other OECD nations.
• Yet another proposed change would allow people to purchase their drugs abroad since many of the most frequently prescribed drugs are available at far lower cost in other countries.  
• The change that would go the furthest to help seniors would be for Medicare to take over Part D. While seniors would still have to pay a premium for coverage (just as they do for other parts of the program), it is likely to be less than they now pay private insurers because Medicare would not have to spend on such things as advertising and marketing, high executive salaries, and generating profits for stockholders and Medicare would have far more negotiating clout with drug makers than individual companies do. Moreover, it would lessen the difficulties seniors now have choosing a plan, and it would avoid the problem of their finding, months after choosing a plan, that changes in their health require medications that are not covered by the plan they chose.

Help, I’ve Fallen into the Doughnut Hole and I Can’t Get Up is the latest in a series of briefs and articles written by Beverly Goldberg addressing the problems facing our nation’s senior citizens. They are available on The Century Foundation Web site at www.tcf.org. For more information, contact Christy Hicks at hicks@tcf.org,  or (212) 452-7723.