'Doughnut hole' lurks for seniors
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By KAREN AUGE The Denver Post - Published: June 25, 2006
At first, health insurance with the new Medicare prescription drug plan seemed like a good deal to Dave and Sharyn Madison.
Then Dave got cancer.
That was when the Madisons found out about the "hole" in their drug plan.
This month, their co-pay was $1,307 for the oral chemotherapy Madison needs to fight pancreatic cancer.
That seemed like a lot, until they learned that in July, they'll have to pay the entire cost of that drug: $2,587.
"We've hit that doughnut hole," Sharyn Madison said.
The "doughnut hole" is a designed coverage gap in the new Medicare program, which began in January.
Almost 7 million senior citizens with Medicare drug coverage are expected to fall into the doughnut hole this year, according to a Kaiser Family Foundation study.
The Medicare drug benefit's basic coverage, known as Part D, pays nothing until drug costs reach $250.
The plan then covers 75 percent of costs — until the bill reaches $2,250 — with the individual paying the remaining 25 percent.
"From $2,250 to $5,100, the plan pays zero," said Mike Fierberg, a regional spokesman for the Centers for Medicare and Medicaid Services.
"The beneficiary pays 100 percent," Fierberg said. "That's what's called the doughnut hole."
The expenditures are calculated annually, so anyone who needs a lot of drugs faces the gap year after year.
Some plans, which are administered by private insurers, also cover fewer drugs or pay less for particular drugs.
Dave Madison, 66, will be one of those people. Doctors have told him he'll have to stay on his grueling chemotherapy regimen — an intravenous treatment once a week for three weeks, then one week off, plus the oral drug Tarceva — for the rest of his life.
Congress intentionally created the coverage gap, said Vicki Gottlich, a senior policy attorney with the Center for Medicare Advocacy.
"Congress wanted to fund catastrophic needs and make sure everybody got something," Gottlich said.
"The only way they could do that for the amount of money they intended to allocate was to create the doughnut hole," she said.
Even with the coverage gap, the price tag for Medicare drug coverage is currently estimated to be $724billion over 10 years, far more than the $395 billion originally projected, according to federal figures.
Congressional reasoning isn't much solace to the Madisons, whose fixed income, including Dave's pension from 40 years as a bricklayer, amounts to about $34,000 a year.
"There's something wrong with the way they wrote Medicare Part D because people who earn as little as we live on and have worked hard all our lives, it drops us out of the picture," Sharyn Madison said.
Before Medicare Part D, many drug companies offered special assistance for people who couldn't afford lifesaving medication.
But there is confusion over whether such assistance is legal under Part D, leading many companies to cut back or cut off that assistance to seniors.
Medicare's Fierberg said drug companies can still legally provide drugs.
But Debra Charlesworth, a spokeswoman for the pharmaceutical company Genentech, said many drug companies are awaiting official clarification on what assistance they can and can't provide.
Genentech makes Tarceva, the drug Dave Madison needs.
Since January, pharmaceutical assistance has dried up, according to Thomas Stephansky, a social worker with Rocky Mountain Cancer Center's Aurora, Colo., clinic.
"With Medicare Part D, we're told patients can no longer get assistance through the manufacturer directly," he said.
It is possible to buy coverage that includes a much smaller doughnut hole, Fierberg said.
"A number of plans in Colorado do offer coverage in the doughnut hole, particularly for generic drugs," he said, adding that those plans cost more.
Nationwide, the Center for Medicare Advocacy is starting to hear stories of people with expensive drug regimens — especially cancer patients, and people with HIV/AIDS or multiple chronic conditions — who are struggling, Gottlich said.
"I've had patients who have gone into debt, who are getting second mortgages, putting expenses on credit cards, even filing for bankruptcy," Stephansky said.
Sharyn Madison fears that sort of financial catastrophe. "We've always had really, really good credit," she said. "Now it's becoming questionable because we're struggling to pay our bills every month. We used to be able go to the movies or out to dinner. Now we just put all the money into medicine and hope it saves his life."
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There are already 10 bills in Congress that would reduce or eliminate the doughnut hole.
Gottlich said there is little hope that any of the measures will become law. "I think Congress is reluctant to open up anything about Part D," she said.
Meantime, Sharyn and Dave Madison are scraping together money for his July chemotherapy and have applied for aid through the drug company.
"We have some of it, but we're starting to panic," Sharyn Madison said.
She said they will probably have to sell Dave's truck to get the entire amount.
After July, they will be through the doughnut hole — at least for this year.
"Then on Jan. 1, we have to start it all over again," she said.
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