In 2003, Congress passed The Medicare Prescription Drug, Improvement and Modernization Act into law. The crafting and passing of this bill was highly influenced by lobbyists from both the pharmaceutical and insurance industries. These groups made sure their coffers would be filled with taxpayers’ money without providing any substantial benefit to American seniors. It was not until the Bill was passed that many started to see the pitfalls of the Medicare Prescription Drug Plan.
Also known as Medicare Part D, the Medicare Prescription Drug Plan started providing prescription drug coverage benefits to Medicare-eligible beneficiaries in 2006. One of the most surprising elements of the drug plan for many seniors was the gap in coverage known as the Medicare Doughnut Hole.
In 2007, the gap in coverage starts once an individual has spent $2,400 on their prescription drugs for the year. Individuals receive no further benefit from the Medicare Prescription Drug Plan until they spend another $3051.25 and make it to the $5451.25 annual expenditure mark.
An estimated 7 million Medicare Prescription Drug Plan beneficiaries will hit the coverage gap in 2007. Hitting the doughnut hole can have very serious health consequences for seniors. In fact, it can even potentially result in death.
Shockingly, a 2006 study published in the New England Journal of Medicine called, “Unintended Consequences of Caps on Medicare Drug Benefits,” found that drug plans with a cap on drug coverage (as is the case with the doughnut hole in the Medicare Drug Plan) have an annual death rate that is 22% higher than plans that do not limit drug benefits.
This study also found that individuals whose benefits were capped were less likely to adhere to their long-term prescription drug therapies once they reached the coverage cap. This non-adherence to drug therapies led to significant increases in hospitalizations and emergency room visits.
By creating a gap in coverage in Medicare Part D, U.S. Congress also created the potential for a major health crisis for seniors once they hit the doughnut hole. As Medicare drug plan prices continue to rise more every year, seniors will be at greater and greater risk of being unable to afford their medications while in the doughnut hole. From April 2006 to April 2007, Medicare drug plan prices increased 9.2% on the top 15 drugs prescribed to seniors.
These price increases, combined with the doughnut hole, will lead to a vicious cycle of non-adherence to drug therapies and poor health outcomes. During the time of year when seniors are hitting the doughnut hole (usually in the late summer and fall months) many will simply stop taking their medications. Come January, when a new Medicare benefit year begins, seniors will start up their therapies again. That is, if they were able to survive the doughnut hole.