by James Parks, Sep 22, 2006

Across the country today, seniors were talking about donuts. Not the kind you pick up at the corner bakery for about $10 a dozen. These donuts cost about $3,000—and nearly 7 million seniors are going to be forced to buy them.

Today is “Donut Hole Day,” the date on which the average Medicare-eligible recipient falls into the donut hole. Under the new Bush administration Medicare Part D rules passed by Congress in 2003, out-of-pocket prescription expenses between the annual amounts of $2,251 and $5,100 are not covered. This nearly $3,000 gap has been dubbed the donut hole, and today marks the date most seniors will have paid $2,251 toward prescription medications and no longer are covered.

Of the 11.8 million Medicare enrollees whose plans include a coverage gap, the Kaiser Family Foundation estimates at least 6.9 million of them could hit the donut hole.

And that angers Herb Zucker, a 78-year-old retired marketing representative from Berwyn, Pa. He hasn’t hit the donut hole yet, but he could soon. Writing in Golden Times, a magazine for seniors in Pennsylvania and New Jersey, he says:

I never expected this to happen. But until now I never really understood the plan or the potential for financial pain. For example, a 90-day supply of Zocor, a cholesterol-lowering drug, was priced at $395.42. My plan picked up $311.42. My co-pay was only $84.00. I was ahead—no complaints.

That is, until I got sick. Flu and a stubborn eye infection added unexpected prescription charges to my standard assortment of drugs. Suddenly, the monthly EOB (explanation of benefits) wasn’t so friendly. By the end of May—five months into the program—my prescription drug charges totaled $1,527 and I was only $723 away from my co-payments evaporating. 

Zucker has recovered from the flu and he is getting a cheaper generic form of Zocor that for now has staved off his falling into the hole. But he worries that if he gets sick again, he’ll fall into the $3,000 donut hole.

According to the Alliance for Retired Americans, many seniors and persons with disabilities were unaware of the donut hole when they enrolled in the new Part D plans. And, even if they were aware, it would have cost nearly $40 more per month for a plan without a coverage gap. Democrats on the House Ways and Means Committee released a report this week saying this additional cost is not something people on fixed incomes could afford. Their report estimates 88 percent of the Medicare beneficiaries with stand-alone coverage ended up with plans that contained a gap.

Zucker is not the only angry senior. Across the country this week seniors and their allies made it clear they want some fundamental changes in the Medicare rules and they intend to hold Congress accountable:

• In Phoenix, members of the Arizona chapter of the Alliance for Retired Americans delivered donuts to the district office of Sen. Jon Kyl (R-Ariz.), who co-authored the Medicare bill, to protest the impact of the law on seniors and send a message to Kyl, who is running for re-election this year.
• Members of the Ohio Alliance joined with other groups to deliver donuts to the district offices of Rep. Deborah Pryce (R) and Sen. Michael DeWine (R), who voted for the bill. DeWine faces a tough challenge for re-election by Rep. Sherrod Brown (D-Ohio), who has the support of the state AFL-CIO.
• Seniors also delivered donut holes to the offices of Sen. Jim Talent (R-Mo.) and Reps. Henry Hyde (R-Ill.) and Peter King (R-N.Y.).
• The California Alliance for Retired Americans held a Donut Hole rally at the Sacramento office of the Pharmaceutical Research and Manufacturers of America (PhRMA), the giant drug industry lobby.
• Seniors also held town hall meetings and rallies in Green Bay, Wis., Philadelphia, Minneapolis and Columbus, Ohio, to demand Congress close the donut hole.

Earlier this month, nearly 600 members of the Alliance delivered bags of donuts—with “Rx Donut Hole No Treat for Seniors” stickers—to the Capitol Hill offices of their U.S. senators and representatives to call attention to the gap in coverage.

A new report by Campaign for America’s Future released yesterday details how the donut hole and the other harmful provisions of Medicare Part D stem from conservative policies bent on shrinking indispensable government services and outsourcing government responsibility to the private sector.

Says Roger Hickey, co-director of the Campaign for America’s Future:

This costly, confusing and corrupt prescription drug plan written by and for the pharmaceutical and insurance companies exemplifies the conservative ideology of governance—outsource essential government services to corporate cronies and pass the bill on to the taxpayers.

During a conference call to release the report, Rep. Jan Schakowsky (D-Ill.) said:

The Bush administration pushed through this sham of a Medicare prescription drug benefit saying that it would help seniors and people with disabilities. But what we got was a plan that shifts costs to seniors and people with disabilities while padding the profit margins of drug and insurance companies.

Another recent report, The Origins of the Doughnut Hole: Excess Profits on Prescription Drugs, by economist Dean Baker, co-director of the Center for Economic Policy Research, says drug companies will make nearly $50 billion in excess profits under Part D in the first year alone, more than twice the size of the Medicare donut hole.

For Zucker, the whole issue boils down to fairness: In Golden Times, he writes: 

Under Medicaid, drug companies were required to charge the government their lowest price; the new Medicare law has no such restrictions. Bottom line is Medicare is unable to use its bargaining clout to negotiate lower prices for me.

On the other hand, I do have mixed feelings about UnitedHealth [his Medicare carrier]. Frankly, it bothers me that while I worry about my donut hole, I read that William McGuire, CEO of UnitedHealth, was reported by the Wall Street Journal to have $1.6 billion in unrealized gains on stock options. Somehow it doesn’t seem fair.

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