The optimist sees the donut

But if you don’t see the “donut hole,” you don’t know why Medicare Part D is going to be a disaster for the Republicans this fall.

I hate to steal Brad DeLong’s line, but why can’t we have a better press corps?

Wednesday’s New York Times runs a story claiming that the prescription drug plan may turn out to be a plus for the Republicans after all. I suppose that’s barely possible. But the story never mentions the major reason it probably won’t be true: the “donut hole.”

Here’s how one website &#8212 which the Times reporters could have found in a fraction of a second using the same Google search I used &#8212 explains the program:

After a $250 deductible, patients pay 25% of the next $2000 in drug costs (or up to $500 in expenditures).

If patients spend more than $2250 in total drug costs, there is no insurance coverage for the next $2850 in drug costs. This is often called the “donut-hole” or “coverage gap” in the prescription drug program. Patients are expected to pay this amount out-of-pocket.

Lastly, after the additional $2850 in out-of-pocket costs, coverage resumes at a rate of 95%, with patients only paying 5% of remaining drug costs, unlimited until the end of the calendar year.

Let’s see: it’s six months to Election Day. So anyone who has coverage by now and spends at least $400 a month on drugs will run out of coverage before it’s time to vote; those who signed up earlier will run out even if they spend somewhat less.

So pretty soon now &#8212 and well before November &#8212 seniors in large numbers are going to start running into that gap. They’re going to show up at the pharmacy with their shiny Part D card and be told that they’re going to have to pay full retail price for their drugs. (Because, of course, the Republicans who wrote the fill forbade Medicare from negotiating the same discounts the big hospital chains get.)

Yes, all that was in the plan documents. But I doubt that’s going to make those folks feel any better, or react with any less fury. Instead of just asking seniors whether they think the plan will cut their costs, why didn’t the poll ask questions designed to figure out how many of them knew about the donut hole and what it meant for them? To say that they’re happy now is like reporting that the man who jumped from the observation deck of the Empire State Building still felt fine as he fell past the 40th floor.

I can’t see how to attribute this to any sort of bias on the part of the Times or its reporters. Even if I thought that the Times management was as willing to go into the tank for Bush as the management of the Washington Post, I can’t see how omitting the key operational fact now would serve any purpose. (Omitting that fact when the plan was before the Congress was a different story.)

It’s not as if a newspaper account that gives Republicans what is almost surely false comfort, and which most of the candidates and consultants must know is false comfort, actually helps the Republican cause. The most likely explanation is simply that the reporters don’t know beans about the actual program on whose politics they’re reporting.

I’m not criticizing here from the perspective of an expert complaining that not everyone knows as much as he does about his pet topic, as I sometimes do when the topic is drugs or crime. Health policy isn’t my thing. I haven’t followed Part D in any detail. I had to look up the details of the “donut hole.” But I’d heard of it, and the reporters for the national newspaper of record apparently hadn’t. That’s scary.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

7 thoughts on “The optimist sees the donut”

  1. I used to watch the people ahead of me in line pay for their prescriptions. I would guess the average amount I saw (which obviously has no statistical validity) was over $300.
    So I'm guessing 'donut hole time' will be about the middle of October.

  2. I had the same reaction and went back to see the byline. Sure enough, in their utter folly the Times editors published a Part D story without having Bob Pear reporting it. It is not merely a case of the newspaper not knowing the details but a newspaper not consulting its own reporter who certainly knows about the donut hole and who probably knows more about Part D than any reporter in the country. What could they possibly be thinking?

  3. The doughnut hole is not a problem. It's an opportunity. In October, when a goodly number of seniors hit the hole and sob stories hit Dateline NBC and 60 Minutes, Congress will break from its recess in a grand show of compassion and rush back into session. Congressmen will fill the hole with general fund money, and return home to their districts as heroes.
    Message: they care.

  4. "I can't see how to attribute this to any sort of bias on the part of the Times or its reporters. ************Even if I thought that the Times management was as willing to go into the tank for Bush as the management of the Washington Post*************, I can't see how omitting the key operational fact now would serve any purpose. (Omitting that fact when the plan was before the Congress was a different story.)" (emphasis added)
    Uh, Bush's Voodoo II economics, the Iraq War, Swift Liars, the list goes on.

  5. Ummm . . . it seems to me that before the "donut hole" hits, all those seniors will have had six months of the government paying for their prescriptions. If they're paying $400 a month, that's $2400 in their pockets that they didn't have before. It's not clear to me that the political NPV is negative here–particularly since there are a lot of seniors who don't spend more than $2400 a year on drugs, and a lot more who spend an even huger amount, and get almost all of it covered. No doubt the Republicans will take a small hit from the donut hole . . . but it seems to me that they'll probably get a big plus for the drug payments.

  6. The question is not how many seniors will get hit, but how many (a dozen or so is all that's needed) get national press coverage for being denied (even temporarily) life-saving drugs. Think Terri Schiavo, except in reverse.

  7. And if they try to quickly patch the donut hole, it'll drive up the defecit and probably drive up interest rates, thus gutting the value of seniors' bond holdings.

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