Thousands more Michigan seniors in 2007 could find themselves paying hundred s of dollars more out of pocket for prescriptions, following an insurer's decision not to cover gaps in Medicare coverage.

Humana Inc., the only insurer to offer drug coverage during the so-called Medicare "doughnut hole" -- the threshold at which the federal program won't reimburse prescription costs -- won't do so in 2007, saying there isn't a big demand for it. Seniors prefer to pay lower monthly premiums, even if it means less rich benefits, the insurer said.

About 14,600 Michigan seniors and disabled residents were enrolled in the plan this year.

"A great number of beneficiaries choose the lowest cost plan," said Dr. Scott Latimer, Humana market president for central and northern Florida, explaining why the company would no longer offer the gap coverage.

Humana offers the lowest-cost plans on average of any Michigan plan, he said. "When everything's laid out, seniors who are looking for a low cost option will have more options this year than last."

Humana Inc. also said it is increasing the prices on all of its stand-alone Medicare drug plans next year. The company blamed the hikes on the higher drug prices, the company's low 2006 premiums and the government's complicated formula to set rates.
Monthly premiums for Humana's cheapest product will soar an average of 53 percent, or $5.29, to between $8.40 and $18.20 while its mid-range offering will jump an average of 38 percent, or $6.11, to $17.10 and $29.60.

Expensive premiums
Under the standard drug benefit, the federal government subsidizes drug costs up to $2,250. The subsidy then stops and the beneficiary must pay for his or her drugs out-of-pocket -- until the accrued costs reach $3,600, which is when Medicare kicks back in and picks up 95 percent of the costs. That in-between time is what's become known as the doughnut hole.

About 6.9 million Medicare beneficiaries nationwide will have to deal with a gap in their drug coverage at some point this year, according to estimates from the Kaiser Family Foundation, a health policy research group.

"Michigan Medicare enrollees won't even have an expensive choice next year," said U.S. Rep. Sander Levin, a vocal critic of the drug benefit program. "Even to get partial coverage during the 'doughnut hole,' Michiganders will have to pay extremely high monthly premiums."

Seniors who are low-income qualify for federal programs that help cover the gap costs.
Balancing the costs

The Medicare drug benefit, the first offered by the federal government, is administered through dozens of private companies. After a glitch-filled rollout this year, more than 213,000 people had signed on for some form of the plan, many saving hundreds of dollars a month.

Enrollment for 2007 coverage begins Nov. 15. Companies were able to begin marketing their plans beginning this week.

Some new or altered plans will offer partial coverage in the doughnut hole, including two that will cover generic drugs and some other medications.

Offering gap coverage only for generic drugs makes sense because most prescription drugs are available in generic form, said Pat Richards, chief operating officer for Health

Alliance Plan, which offers several Medicare drug plans. The medical community generally agrees generics are an acceptable low-cost alternative to costly prescriptions.

"We're trying to balance the cost factor," Richards said, by limiting gap coverage to generics.

The plans for 2007 that offer partial coverage in Michigan have premiums ranging from $42.50 a month to $86.90 a month -- more than twice the average $24-a-month cost of the prescription benefit.

Michigan is one of 12 states where there won't be a full coverage plan next year.

Navigating the gap
Handling the Medicare coverage gap:
-- Consider switching to generics or other lower-cost drugs. Check out Prescription Drug Plan Finder on www.medicare.gov.
-- Keep using Medicare drug plan card to continue getting discounted rates.
-- Look into charitable programs. Information on local programs is available at www.benefitscheckup.org.
-- If you have Medicare and are low-income, you may qualify for help paying for drugs. Contact the Social Security Administration by visiting www.socialsecurity.gov or calling (800) 772-1213.

The Associated Press contributed to this story. 

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