In a study that quantifies the effects of the “doughnut hole”—the name for the gap in coverage in the Medicare Part D plan—the Kaiser Family Foundation reported that around 3.4 million beneficiaries in 2007 reached the coverage gap, forcing them to face the full cost of prescriptions for an average of just over four months. As a result, not everyone could afford to keep up with their medications.

The doughnut hole begins after a patient has accrued $2,510 in drug costs (in 2007, the initial coverage was $2,400). From there, the next $3,216 ($3,051 in 2007) must be paid by the patient before Medicare coverage resumes as “catastrophic coverage,” hence, the “hole.” Seniors in the doughnut hole are forced to struggle through it by paying all the bills for their medications as well as the monthly premiums for the plan itself, which they must stay enrolled in. About 24 million people are enrolled in a Part D plan; 14% of them reached the coverage gap.

The study focused on enrollees taking one or more drugs in eight drug classes to treat chronic conditions, including Alzheimer’s disease, high cholesterol, depression, diabetes, gastroesophageal reflux disease, heart failure, hypertension, and osteoporosis. Those with serious chronic conditions had a substantially higher risk of reaching a gap in coverage. The study noted that 64% of plan enrollees taking medications for Alzheimer’s disease reached the coverage gap, as did 51% of those taking oral antidiabetic medications and 45% taking antidepressants.

What happened after people reached the gap varied. When required to pay the full cost of their medications, some changed their use of prescription drugs:

• Overall, 15% stopped their drug therapy, 5% switched to another medication in the class, and 1% reduced the number of drugs they were taking.
• Ten percent of patients taking oral antidiabetic drugs stopped taking their medications.
• Eighteen percent of those taking a drug for osteoporosis stopped taking medications.
• Twenty percent of those taking proton pump inhibitors discontinued their medication.

The vast majority (84%) of those who reached the coverage gap did not have sufficient additional spending to receive catastrophic coverage, at which point the Part D plan would pay 95% of drug costs. But those who reached the coverage gap faced substantial increases in out-of-pocket spending. These enrollees saw their average monthly out-of-pocket costs nearly double—from $104 prior to the coverage gap to $196 in the “doughnut hole,” according to the study.

The study also found that older seniors reached the gap before younger seniors: 32.6% of seniors ages 85 and older reached it, compared to 30.4% of seniors ages 75–84 and 25% of seniors ages 65–74.

The analysis does not include beneficiaries who received low-income subsidies, since they don’t face a gap in coverage. Because 2007 is the first year in which most beneficiaries were enrolled for 12 months, according to the study, this is the first time seniors have faced the full impact of the gap.

Click The Medicare Part D Coverage Gap: Costs and Consequences in 2007 to download the complete report.

Satisfaction rate high, says Medicare administrator

Ironically, a few days before the study was released, the Centers for Medicare & Medicaid Services announced that the Part D plan was doing well. “Measured by enrollment, lower costs than originally expected and persistently high satisfaction rates, the Part D drug benefit program has in a short time become a stable, familiar, and vital part of Medicare,” said CMS Acting Administrator Kerry Weems in a press release. “Beneficiary experience in Part D continues to be good, with millions of people getting the prescription drugs they need.”

Weems noted that the average monthly premiums for 2009 are expected to be far less than originally projected—$28 instead of $44.12, the estimate made when the program was enacted. The premium will be about $3 higher than the average for 2008.

SilverPlanet’s Discount Prescription Drug Card offers some relief

As a way of helping seniors and their families with prescription costs, SilverPlanet is offering a free Discount Prescription Drug Card that provides savings of 10% to 85% on brand-name and generic drugs. To get your card, go to SilverPlanet.com, and click on the “Discount Prescription Drug Card” headline. Then click on “Pharmacy Locator” to find the pharmacies closest to you and “Medication Pricing” to compare prices at each pharmacy.

There’s no cost to sign up, no obligation, and no limit on the number of prescriptions. The card can be used by anyone in your family. Just print the card and take it to one of the 58,000 participating pharmacies—chances are, you live near one.