Falling into the Donut Hole

“Have you had a fall recently?” my doctor asks these days.  Well, Doctor, yes I have.  I fell into a donut hole.  I didn’t think I was that feeble.  And I never saw it in front of me.

I wasn’t even aware of my fall until my spouse went to our pharmacy last month to pick up my monthly supply of Eliquis.  She called me at home from the pick-up window and said, “They are charging $111 for your prescription — that can’t be right, is it?”

I had been paying $37 a month for Eliquis, a so-called Tier 3 “preferred brand” medicine that helps prevent clot-formation if you have atrial fibrillation or certain other conditions.  Eliquis costs more but has many advantages over traditional anti-coagulants like warfarin (an inexpensive generic) including less unintentional bleeding, almost no food interactions and no routine blood testing.  I am glad that God invented Eliquis.*

In any event, I told my spouse I would pick up the prescription myself, after I had a chance to look at my Medicare Advantage coverage.  Doing so, I nearly (metaphorically) fell over.   Medicare’s prescription drug coverage gap (popularly called the donut hole) begins when $3,820 has been spent on drugs during the calendar year.  I thought the $3,820 referred to what I have spent on drugs, but no — it means what the drug companies were paid.

This is an important distinction, because after you enter the donut hole, you pay more for all of your medications, not just brand-name drugs.  I am now responsible for 25% of the $441 paid to Bristol-Myers Squibb for my monthly supply of Eliquis, and 37% of the $76 paid to Rising Pharmaceuticals for a 90-day supply of my generic blood-pressure pills.

In the Sea of Donut Holes (with the Blue Cross Meanies)

I will remain in the donut hole until I have paid $5,100 out of my own pocket for drugs, which is not going to happen this calendar year.  So my fall into the donut hole will cost me an additional $303, assuming there are no medical surprises.

Shame on me, someone who is reasonably well-versed when it comes to what I pay and what I get, for not paying more attention to my benefits statements.  The donut-hole rules, as complicated as they are, should not have come as a surprise to me — but I’m still taken aback at how much money the drug companies get for my medications, even the generics.

You may have read elsewhere that provisions in the ACA (it’s alive!) will finally close the drug coverage donut hole in 2020.  But here’s the thing, as Joe Biden likes to say: closing the donut hole on paper does not mean I will pay the same copays all year long.  The fact that I paid (only) $37 for Eliquis before I hit the donut hole is best thought of as a benefit of my particular plan — by law, I was “responsible” for up to 25% of the cost even before I reached the donut hole.  Under some other plan, I could have been paying $111 a month from the outset instead of that $37 copay.

Confused?  I know I am, and I’m not alone.  Wading through the explanation of costs and coverage on medicare.gov calls for a lot of patience if not an accounting degree.  As far as I can tell, not a whole lot is going to change for me in 2020.  I will start out with low copays, but once my total drug costs reach $4,020 (the new threshold), I will pay 25% of whatever price the drug company asks.  I will stay in this (ghost) donut hole until my out-of-pocket costs reach $6,350 (a $1,250 hike from 2019), after which I will pay 5% of the retail price for my medicines.

As there is no standard Medicare drug plan, I can’t predict what all this means for others.  If you take even one non-generic drug, read your coverage documents carefully.  Not that this gives you a lot of choice.

• • • 

One last item, about the politics of all this ridiculousness.  Paul Krugman pointed this out in 2005, when Medicare Part D was signing up its first participants:

Republican Congressional leaders who rammed the bill through in 2003 weren’t actually trying to protect retired Americans against the risk of high drug expenses.  Their purpose was purely political: to be able to say that President Bush had honored his 2000 campaign promise to provide prescription drug coverage by passing a drug bill, any drug bill.

Once you recognize that the drug benefit is a purely political exercise that wasn’t supposed to serve its ostensible purpose, the absurdities in the program make sense.  For example, the bill offers generous coverage to people with low drug costs, who have the least need for help…  Meanwhile, the people who are actually likely to need a lot of help paying their drug expenses were deliberately offered a very poor benefit.  According to a report issued along with the final version of the bill, people are prohibited from buying supplemental insurance to cover the doughnut hole to keep beneficiaries from becoming “insensitive to costs” — that is, buying too much medicine because they don’t pay the price.

This has always been conservative dogma: if we make health care easy to get, people will use too much of it; if we force people to pay for it, they will reconsider whether they really need it; and if we let health care prices seek their own level, that will effectively ration it. 

It is easy to spot the flawed premises here.  It presumes people like going to the doctor and taking medicine and would seek out such activities if there were no restraints.  It presumes ordinary people have the means to shop for health care as well as the expertise to judge its cost-effectiveness.  It presumes that cost-sharing by patients is an appropriate way to get patients to use lower-cost drugs — when the only real choice most patients have is whether to get their prescription filled.  And it equates health care with consumer goods, in that some people can afford the best and some can’t and that’s the way it oughta be in America.

Maybe conservatives would like to talk about cost-sharing with people who take Revlimid for multiple myeloma.  (Medicare spent $3.31 billion on Revlimid in 2017, more than any other drug.  Eliquis came in second at $3.07 billion.)  The copay for one dose of Revlimid is often $7,000 or more, which would immediately push a patient through the donut hole.  Or maybe conservatives should ask people with chronic hepatitis C whether they can just live with it — after all, even the new generic version of ledipasvir costs $15,000 per course.  Finally, with respect to so-called lifestyle diseases, maybe conservatives would like to share their evidence that forcing people to bear the financial burden of past unhealthy behaviors serves to deter those behaviors.  (I think it only serves to punish them.)

The Medicare Part D approach to prescription drug coverage is based on false premises and should be scrapped.  Health care should be a societal burden, not an individual one;  yes, we should all live healthier lives, but no one I know asked to have atrial fibrillation or multiple myeloma or hepatitis C.  Every patient should receive the most cost-effective treatment that has been shown to be medically effective and respects her quality-of-life.  The patient’s personal financial situation and the type of insurance she has should not be factors in selecting her treatment.  This implies no more deductibles, no more donut holes. No more misguided incentives placing burdens where they don’t belong while failing to address the real causes of outlandish medical costs.

So here is where I part ways with the “Medicare for All” and “Public Option” proponents. Medicare may be better than other alternatives but it isn’t good enough.  I am waiting for other presidential candidates besides Bernie Sanders to step up and say so.

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* U.S. Patent 9,326,945 was issued May 3, 2016 to Jatin Patel et al and assigned to Bristol-Myers Squibb.  The next drug God should create (with help from Dr. Patel) is an over-the-counter anti-inflammatory that one can take with Eliquis.
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3 Responses to Falling into the Donut Hole

  1. Sue Collins says:

    Well, I am just grateful that you sort out all of our insurance–health care insurance and billing has to be the worst to wade through.

  2. susan says:

    The same premise is used for other things…”handouts to the poor (ie SNAP/aka “food stamps”) will make them NOT want to work…..because of course, who wouldn’t want to hang out and survive on gov’t cheese sandwiches in lieu of a monthly paycheck?

    It’s all smoke and mirrors to deflect from huge tax cuts to corporations and the top 1% at the expense of the middle class and below. Back to Serfdom!

  3. Gavin Larsen says:

    Thank you for writing this so clearly, Craig, and with such obvious, irrefutable reason. I love your line about the false premise of the conservative argument that if health care is financially within reach, people will “overuse” it. I’ve screamed my own response to that argument a thousand times– even if it was free, who WANTS to go to the doctor more than they have to??
    Good luck with the donut hole, in the meantime….

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