Medicare brand-name needs go unmet
WASHINGTON — From the day the new Medicare drug plan was introduced, critics warned that it had a big loophole -- the "doughnut hole" -- a coverage gap that leaves some recipients with $3,000 in costs to pick up themselves.
The private sector was supposed to help. And last year, Sierra Health Services, an insurer based in Las Vegas, announced it would do so. In exchange for higher monthly premiums, Sierra offered comprehensive coverage of brand-name medications for patients who had to fill the cost gap.
But the Sierra Rx Plus plan lost $3 million in January, its first month of operation. Faced with that red ink, the company announced in late February that next year it would no longer offer a plan that covers brand-name drugs in the gap.
About the same time, hundreds of enrollees started getting notices that their Sierra coverage was being discontinued for nonpayment -- although some said they already had sent in checks. Medicare officials recently intervened to order about 2,000 customers reinstated, including about 200 AIDS patients.
The episode draws attention to problems inherent in Medicare's partnership with private insurers to provide drug coverage for elderly and disabled Americans. Because Sierra was the only major plan to cover brand-name drugs in the gap this year, recipients may have no comparable option for 2008.
Medicare's coverage gap was designed by a Republican-led Congress to help keep program costs down. After the first $2,400 in total drug costs, beneficiaries are responsible for the next $3,051 -- the doughnut hole. Beyond that, the program pays 95%. Plugging the gap for all seniors could cost taxpayers as much as $450 billion over 10 years.
"It's not very likely to happen in this Congress," said Rep. Pete Stark (D-Fremont). "Closing the doughnut hole would be expensive unless you did a whole host of other things, such as having the government negotiate for the purchase of drugs. And the president would probably veto that."
Yet many healthcare experts say the doughnut hole has become a major hindrance to the program's ability to help some of the most severely ill patients.
More than 3 million Medicare recipients face the coverage gap, and insurers that attempt to offer a relatively generous benefit to fill it risk attracting the costliest patients. It's a chance most companies won't want to take.
