Deep in the (doughnut) hole

Under Medicaid Part D, a patient who can’t come up with $2850 to cover the “doughnut hole” in effect loses coverage entirely after the first $2200.

Like Matt Yglesias, I hope the “doughnut hole” coverage gap in Medicare Part D turns out to be a political disaster for its Republican designers this fall.

But reading this Washington Post story on the doughnut hole, I was struck by a blinding flash of the obvious. Because the coverage gap is defined by actual expenditure, not by prescription, a Medicare recipient with very big drug bills who can’t scrape up $2850 is out of luck for the rest of the year. It’s not as if he or she can just forgo $2850 worth of medicine, or get it in physician samples or under drug-company programs to assist low-income patients, and then start collecting again. There needs to be actual money on the table. So the program is well-designed for those to whom high drug prices are an annoyance, and badly designed for those to whom high drug prices are a catastrophe.

Good going, guys!

Author: Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic - Land Use, the Environment and Local Government. He grew up and still lives in the San Fernando Valley, about which he remains immensely proud (to the mystification of his friends and colleagues). After graduating from Yale Law School, and while clerking for a federal appeals court judge in Boston, he decided to return to Los Angeles shortly after the January 1994 Northridge earthquake, reasoning that he would gladly risk tremors in order to avoid the average New England wind chill temperature of negative 55 degrees. Professor Zasloff has a keen interest in world politics; he holds a PhD in the history of American foreign policy from Harvard and an M.Phil. in International Relations from Cambridge University. Much of his recent work concerns the influence of lawyers and legalism in US external relations, and has published articles on these subjects in the New York University Law Review and the Yale Law Journal. More generally, his recent interests focus on the response of public institutions to social problems, and the role of ideology in framing policy responses. Professor Zasloff has long been active in state and local politics and policy. He recently co-authored an article discussing the relationship of Proposition 13 (California's landmark tax limitation initiative) and school finance reform, and served for several years as a senior policy advisor to the Speaker of California Assembly. His practice background reflects these interests: for two years, he represented welfare recipients attempting to obtain child care benefits and microbusinesses in low income areas. He then practiced for two more years at one of Los Angeles' leading public interest environmental and land use firms, challenging poorly planned development and working to expand the network of the city's urban park system. He currently serves as a member of the boards of the Santa Monica Mountains Conservancy (a state agency charged with purchasing and protecting open space), the Los Angeles Center for Law and Justice (the leading legal service firm for low-income clients in east Los Angeles), and Friends of Israel's Environment. Professor Zasloff's other major activity consists in explaining the Triangle Offense to his very patient wife, Kathy.

5 thoughts on “Deep in the (doughnut) hole”

  1. Yes, for some people it's basically a death sentence. When I asked my doctor about options for people with this problem, he told me that, due to recent audits and accounting changes, the doctors at his hospital were no longer allowed to dispense any physician samples, and that the drug companies had cut back their programs for low-income patients because of the passage of the Medicare Part D program.

  2. Contrary to the bit of comment spam posted by Ted above, it seems as though the actual incentives for someone with a lot of prespcription drug expenses are more or less the opposite: since for anyone who blows through the top end of the whole, the out-of-pocket costs are more or less fixed, there is no incentive to look for inexpensive prescriptions.
    Indeed, I can easily imagine fraud arising where crooked pharmacies give kickbacks to patients buying overpriced prescriptions to hit the top end of the whole, either directly as cash or perhaps more subtly as special discounts on other products.

  3. If you do the math on the doughnut hole problem faced by people on a fixed income and a fixed perscription plan, lower cost drugs are the answer if they reach the doughnut hole 6 months or more into the calendar year. Not only is SmartChoiceDrugstore a legitimate business regulated by the state, it also features a walk in pharmacy in the Austin, Texas location. SMD also sell cancer drugs at cost.

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