In the donut hole

Ms. X is a 80-something year-old woman with congestive heart failure, high blood pressure, diabetes, rheumatoid arthritis and asthma (among other things). She on about 15 medications that adds up to nearly $4000 a year. Unfortunately, this falls right in the middle of the famous donut hole of Medicare Part D (the prescription coverage part of medicare). I never really thought much about it until I saw how this affects Ms. X. Here’s Medicare Part D’s payment schedule from 2010:

If your drugs cost between $2830 and $6440 per year, you get no coverage, but if your drugs cost more than $6440, you get 95% of it covered by medicare. This makes absolutely no sense to me. I was wondering how the hell this came about and it turns out that it’s the consequence of two separate coverage plans (one clearly made completely independently of the other). There’s Medicare initial drug coverage that covers 75% of all drugs on the formulary from $310 to $2830 (there’s a $310 deductible). Above $2830 there is no additional coverage by Medicare’s initial drug coverage. However, if you have to spend (out of pocket) more than $4550 (that’s your prescription drug costs go over $6440) Medicare’s catastrophe coverage kicks in. At this point, Medicare pays 95% of anything that goes over. Medicare does have an “Extra Help” program that includes coverage of the donut hole, but you have to make less than $16245 a year to qualify (not really much). Ms. X is a widower who rents an apartment in town. She has an income of about $18000 a year. She makes too much to qualify for the extra help. She can’t really afford to pay an extra $60-$80 a month that the extra “gap coverage” insurances cost. Now, I don’t spend much money, but I know that you really can’t do much on $18000 a year, especially if you have numerous chronic medical problems. Ms. X has gotten to the point that she is not eating well, she’s not filling some of her prescriptions and has even resorted to taking her son’s albuterol (he has private insurance) for her asthma.

Luckily, the healthcare reform package that recently passed will start closing this donut hole, but it looks like it won’t be until 2020 before the gap is completely closed. I’m not sure why it should take 10 years to fix it. I’d bet that none of the people who set this system up or who decided that it's ok to wait 10 years before closing the gap have an 80 year-old grandmother who steals their albuterol.