Drug Plan Coverage for Seniors in "Doughnut Hole" Will Be Scarcer and Less Affordable in 2007

In 13 States, No Drug Plan Will Provide “Doughnut Hole” Coverage in 2007 for the Top Medicines Prescribed to Seniors—up from Four States in 2006

Washington, D.C. – In 13 states next year, there will be no drug plans that offer coverage in the so-called “doughnut hole”—the big drug coverage gap in the Medicare Part D prescription drug program—for the top medicines prescribed to seniors, according to a new report issued today. In 2006, there were only four such states, but the number of seniors without access to such doughnut hole coverage will increase from 375,000 to 6.6 million in 2007, an 18-fold increase.

In the 37 states and the District of Columbia in which plans will continue to offer such doughnut hole coverage, premiums for the lowest-priced Part D plans will increase by 87.4 percent, jumping from a median monthly price of $55.08 in 2006 to $103.20 in 2007 (an increase in annual premiums from $660.96 to $1,238.40).

The report, issued by the health consumer watchdog organization Families USA, contradicts the Bush Administration’s claims that in 2007 “there will be more plans with coverage in the [doughnut hole] gap.” According to the report, the four states (Alaska, Hawaii, Maine, and New Hampshire) that did not have plans with meaningful doughnut hole coverage in 2006 will be joined by nine additional states (Connecticut, Florida, Massachusetts, Michigan, New York, North Carolina, Rhode Island, Vermont, and Wisconsin) in 2007. 

In 2006, the doughnut hole coverage gap begins once a senior has $2,250 in drug costs. When a senior reaches that threshold, the senior has no coverage until his or her drug costs reach $5,100—a gap of $2,850. In 2007, the gap will increase to $3,051, and it is projected to grow to $5,066 in 2013. While in this coverage gap, seniors continue to pay Part D premiums.

“Drug plan coverage in the doughnut hole will be much scarcer in 2007, and, in those states where such coverage continues to be available, it will be far more expensive,” said Ron Pollack, Executive Director of Families USA. “This coverage gap never made sense, and now it is getting worse for seniors who take multiple prescription drugs.”

In seven upper Midwestern and Mountain-West states (Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, and Wyoming) that will still have Part D plans that provide doughnut hole coverage for the most commonly prescribed drugs, premiums for the lowest-priced plans will increase by 185 percent, from $38.70  per month to $110.30 per month—an annual cost increase from $464.40 to $1,323.60.

Beyond the premium hikes in those seven states, seniors will face steep premium increases in the following states: New Jersey (179.8 percent), Missouri (111.8 percent), Delaware (95.2 percent), the District of Columbia (95.2 percent), Maryland (95.2 percent), Kansas (88.7 percent), Alabama (84.3 percent), and Tennessee (84.3 percent).

According to the report, in 2006, there were approximately 375,000 Medicare beneficiaries in the four states that had no Part D plan that had doughnut hole coverage for the top medicines prescribed to seniors. In 2007, with the addition of nine more states, that number will grow to more than 6.6 million beneficiaries—almost 18 times more than in 2006.

Of the top 25 drugs prescribed to seniors, 18 have no generic substitute. As a result, the Families USA report focuses on Part D stand-alone drug plans that provide doughnut hole coverage for brand-name as well as generic drugs. The overwhelming majority of Medicare beneficiaries receiving drug coverage are in the stand-alone plans because such plans enable seniors to stay in traditional Medicare so that they can retain their chosen doctors.

Data for the Families USA report were derived from the Centers for Medicare and Medicaid Services (CMS). In its “Landscape of Plans,” which is available online at www.medicare.gov, CMS identifies all Part D plans that provide coverage for all formulary drugs in the doughnut hole in 2006 and 2007. In states where more than one such plan was available, Families USA reported on the plan with the lowest monthly premium for that year. 

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

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