Seven million seniors will face dire health and financial consequences as they begin falling into Medicare Part D’s “doughnut hole,” warned several members of Congress at a July press conference.

President Bush’s prescription drug plan creates a massive gap in coverage which the average Medicare-eligible American will hit Sept. 22, said a report from the Campaign for America’s Future. The gap results from the convoluted provisions of the Part D plan, which require beneficiaries to pay not only an initial deductible and then 25 percent of drug costs. After they incur $2,250 in expenses for the year, beneficiaries must also pay for all additional drug costs until the total exceeds $5,100. Above that level, insurance will again kick in, paying 95 percent of drug costs.

While in the doughnut hole, seniors will be forced to pay the full cost of their prescription drugs on top of Medicare Part D’s costly monthly premiums.

“The ‘doughnut hole’ will create a dangerous ripple effect on the health of America’s seniors,” said Rep. Marion Berry (D-Ark.). “Seniors will have to scale back on critical medications which could endanger their health and increase health care costs over the long run.”

Rep. Jan Schakowsky (D-Ill.) said that in crafting Part D last year, the Republicans could have allowed Medicare to negotiate for lower drug prices like the Veterans Administration does. Instead, “they chose to side with the drug companies,” said Schakowsky, and shift costs to seniors and people with disabilities.

“The pharmaceutical companies killed every attempt to allow Americans to benefit from the same low drug costs that other countries enjoy,” said Rep. Darlene Hooley (D-Ore.).

Fifty-five percent of those entering the doughnut hole will not be able to escape it, said the CAF report. Over time that number will increase, as Part D’s threshold for resuming coverage rises each year. Robert Borosage, CAF director, called for Congress to “take the Medicare prescription drug plan out of the hands of private insurers and requiring the government to negotiate lower prices.”

How much time and money does the Medicare drug plan waste?

The doughnut hole gap was only necessary because the plan’s overall design added significant costs and complexity, according to a July 25 report by the Center for Economic and Policy Research. That report says the excess costs of the drug benefit plan are much larger than the size of the doughnut hole.

If the drug benefit had been administered through the existing Medicare system, rather than through private insurers, the doughnut hole could be considerably smaller at no additional cost to the government. Furthermore, if Medicare had been allowed to bargain directly with pharmaceutical companies — as is done by the Veterans Administration — the savings would be more than twice the size of the doughnut hole.

The report notes that Medicare beneficiaries spent on average more than eight hours trying to review competing drug plans.

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