FOR IMMEDIATE RELEASE: October 31, 2006

Schumer Reveals: Nearly 7,000 Staten Island Seniors Threatened By Medicare Drug Plan “Donut Hole” – Increasing Their Costs 300 Percent

At Least 6,971 Staten Island Medicare Part D Recipients Have Reached or Will Reach Gap in Coverage; Shell Out Full Price for Prescriptions and Still Have to Pay Drug Plan Premiums

Senator to Push Legislation to Eliminate Premiums for Seniors Who Lose Coverage and Eliminate the Donut Hole Altogether

With 2007 Enrollment Period Approaching, Schumer Urges Seniors to Find out H

U.S. Senator Charles E. Schumer today revealed that at least 6,971 Staten Island seniors could see or already have seen their out-of-pocket drug costs suddenly skyrocket by 300 percent because of a coverage gap in the Medicare drug plan. Unlike most other types of health insurance, the Medicare drug benefit was designed with a coverage gap, or “donut hole”. Seniors enter the donut hole once their total drug costs have exceeded $2,250, and while in the donut hole they must pay for all of their drugs out of pocket, as well as continuing to pay the full monthly premium. Schumer announced legislation to fill the gap in coverage, eliminate premiums for seniors while they are in the donut hole, and urged seniors to read the fine print on their plans for 2007.

“This donut hole is hitting Staten Island seniors like a ton of bricks,” Schumer said. “Seniors should not have the rug pulled out from under them when they are struggling to pay for the rising cost of prescription drugs. We need to do everything we can to ensure that all Staten Island seniors have access to affordable prescription drugs and never have to choose between getting their medication and putting food on the table. This plan is not just a donut hole, it’s a black hole.”

The Medicare drug benefit's donut hole is one of many features of the new law that members of Congress including Senator Schumer opposed from the outset. Under the current system, drug plans pay 75 percent of patients' drug costs between $250 and $2,250, but zero percent of the total costs between $2,250 and $5,100 (with beneficiaries paying 100% of costs in the “donut hole”). Coverage does not resume until the beneficiary's costs reach $5,100, leaving New York seniors to pay $2,850 in direct costs while in the donut hole.

Once seniors fall in the donut hole, beneficiaries who had been paying $20 or $30 per month in co-pays for their prescription medications will be forced to pay hundreds of dollars more. In addition, Schumer said that seniors in the donut hole get hit twice because they are forced to continue to pay their monthly premiums despite the interruption of coverage.

Schumer also warned that the donut hole occurs every year, and will likely expand each year. It is estimated that the size of the donut hole will grow from $2,850 in 2006 to $5,066 in 2013. In addition, rising prescription drug prices have compounded the issue of the donut hole, causing seniors to reach the $2,250 spending cap sooner. According to Families USA, a leading heath care consumer advocacy group, the median price increase for the 20 most prescribed drugs was 3.7 percent between November 2005 and April 2006.

In a study done by the Kaiser Family Foundation, a non-profit health care research organization, one in four Medicare drug plan beneficiaries will reach the donut hole this year, meaning that their total drug costs will be greater than $2,250 this year. Seniors across the country have already entered the donut hole this year, with the average senior who ends up reaching the donut hole having hit it in September.

In addition, Schumer revealed that with the 2007 open enrollment period rapidly approaching, the landscape of drug plans has changed. Some seniors are enrolled in plans that have changed their features such as cost-sharing requirements or the list of drugs that are covered by the plan. In other cases, new alternatives are available. Earlier this year, Schumer called on America’s Health Insurance Providers (AHIP) to offer more enhanced coverage drug plans for Medicare beneficiaries in 2007 so that seniors could affordably opt to avoid the donut hole. When the 2007 plan offerings were announced earlier this month, there were 29 plans that will have some type of enhanced coverage, whether they provide coverage in the donut hole or have little or no deductible. Seniors need to carefully examine their new options to determine if a change in plan would benefit them.

To protect seniors and close the donut hole, Schumer announced the following three-point plan:

No Premiums While In The Donut Hole: Schumer announced he was pushing The Prescription for Fairness Act of 2006 (S.3647). The bill would waive the drug plan premium for seniors during any month that a beneficiary falls into the donut hole. The provision would last through Fiscal Year 2008 and would provide short term relief to seniors suddenly forced to pay more for their drugs.

Eliminate the Donut Hole Altogether: Schumer announced a new push for the Meeting Our Responsibility to Medicare Beneficiaries Act (S.18) which would, among other things, phase out the donut hole over time. By freezing the current catastrophic threshold ($5,100), the donut hole would gradually close.

Encourage Seniors to Switch to Plans with Coverage in the Donut Hole: After Schumer’s call to health insurance companies to offer more plans under which seniors would not be affected by falling into the donut hole, there are new plan offerings that may be beneficial to seniors. Medicare beneficiaries and their families should contact a counselor at New York’s State Health Insurance Assistance Program at 1-800-701-0501 to determine if there is a better plan option out there.

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