11.11.2005
The Deadly Doughnut (NYTimes.com)
By PAUL KRUGMAN
Published: November 11, 2005
Registration for Medicare's new prescription drug benefit starts next week. Soon millions of Americans will learn that doughnuts are bad for your health. And if we're lucky, Americans will also learn a bigger lesson: politicians who don't believe in a positive role for government shouldn't be allowed to design new government programs.
Before we turn to the larger issue, let's look at how the Medicare drug benefit will work over the course of next year.
At first, the benefit will look like a normal insurance plan, with a deductible and co-payments.
But if your cumulative drug expenses reach $2,250, a very strange thing will happen: you'll suddenly be on your own. The Medicare benefit won't kick in again unless your costs reach $5,100. This gap in coverage has come to be known as the "doughnut hole." (Did you think I was talking about Krispy Kremes?)
One way to see the bizarre effect of this hole is to notice that if you are a retiree and spend $2,000 on drugs next year, Medicare will cover 66 percent of your expenses. But if you spend $5,000 - which means that you're much more likely to need help paying those expenses - Medicare will cover only 30 percent of your bills.
A study in the July/August issue of Health Affairs points out that this will place many retirees on a financial "roller coaster."
(More ... The Deadly Doughnut - New York Times) ¶ 21:49
Published: November 11, 2005
Registration for Medicare's new prescription drug benefit starts next week. Soon millions of Americans will learn that doughnuts are bad for your health. And if we're lucky, Americans will also learn a bigger lesson: politicians who don't believe in a positive role for government shouldn't be allowed to design new government programs.
Before we turn to the larger issue, let's look at how the Medicare drug benefit will work over the course of next year.
At first, the benefit will look like a normal insurance plan, with a deductible and co-payments.
But if your cumulative drug expenses reach $2,250, a very strange thing will happen: you'll suddenly be on your own. The Medicare benefit won't kick in again unless your costs reach $5,100. This gap in coverage has come to be known as the "doughnut hole." (Did you think I was talking about Krispy Kremes?)
One way to see the bizarre effect of this hole is to notice that if you are a retiree and spend $2,000 on drugs next year, Medicare will cover 66 percent of your expenses. But if you spend $5,000 - which means that you're much more likely to need help paying those expenses - Medicare will cover only 30 percent of your bills.
A study in the July/August issue of Health Affairs points out that this will place many retirees on a financial "roller coaster."
(More ... The Deadly Doughnut - New York Times) ¶ 21:49
