• Statewide Protests Over Part D Deficiencies, Including Lack of Coverage
  • New Health Access Policy Brief Shows Minimal Oversight Over Private Part D Plans
  • Key Bills on Gov’s Desk (AB2170, AB2667, AB2911) Would Fill Gaps in Federal Law
  • Also: Universal Health Care Bill, SB640(Kuehl), Officially Vetoed

Today, many senior groups took grassroots actions around the state to mark Medicare Part D “Donut Hole Day,” the statistical date that an average senior will hit a coverage gap and start have to pay full price for medications under the new Part D prescription drug plan. More information about the actions, new policy briefs, and pending bills on the Governor’s desk, is below.

ALSO: SB840 VETOED: Many of these same seniors groups were also disappointed today at Governor Schwarzenegger’s official announcement vetoing SB840, the California Health Insurance Reliability Act, to create a universal, publicly-financed health system for all Californians. (For more information, see the Health Access Update for September 8th, at the Health Access blog:

In the Governor’s veto message against “government-run” health care, he was making arguments that have been made against Medicare, which is deeply valued by California families. When Medicare was enacted 40 years ago, it set a standard of ensuring that seniors and people with disabilities get comprehensive medical care. Unfortunately, that reputation has been tarnished a bit in the last year by the confusing and controversial Part D plan, which is ironically the only part of Medicare that is totally privatized.

BACKGROUND ON MEDICARE: When Congress crafted the Medicare Part D plan, they deliberately decided to prohibit the federal government from negotiating with the drug companies for the best possible price. Instead, they delegated the administration of this benefit to newly-created private prescription drug plans, each with their different levels of cost-sharing, pharmacy networks, formularies, and other paperwork.

THE DONUT HOLE: Because these plans were not able to get the same levels of discounts as Medicare could, the coverage is less comprehensive–most notably with the “donut hole.” This month, millions of seniors across the country are expected expected to fall into the so-called Medicare Donut Hole — the gap in coverage where plans pay nothing, but beneficiaries must continue to pay the premiums on their prescription drug plans. The “Donut Hole” begins once a senior’s drug cost reaches $2,250 and continues until they reach $5,100, when catatrophic coverage kicks in.

PROTESTS TODAY: The California Alliance for Retired Americans held protests in front of PhRMA Offices in Sacramento and at UnitedHealth Group offices in Long Beach. Seniors chanted slogans such as “PhRMA got the donut, we got the hole,” and were locked out of the office building Sacramento, even with dozens of seniors knocking on the door to do be let in. The Congress of California Seniors visited Congressional offices up and down the state, delivering donut holes to staff of Representatives, in Sacramento , Gold River , Palo Alto , San Jose , Campbell , Garden Grove , Newport Beach, and Los Angeles.

As California seniors find themselves paying more out-of-pocket for their needed medications, health, consumer and senior advocates were urging Gov. Arnold Schwarzenegger to sign bills to help remedy the issues raised by Part D.

One bill that the Governor has also pledged to sign is AB2911(Nunez/Perata), to create a prescription drug discount program. In addition to helping millions of uninsured people, it would also provide a discounts to Medicare recipients who are not covered in the “donut hole” in Part D.


However, Medicare Part D doesn’t just have a gap in coverage, but in oversight over these newly-created, private prescription drug plans.

A policy brief released today by Health Access Foundation provided some stark findings about the lack of public oversight over these plans:

  1. The federal government has placed few resources in overseeing these new drug plans.
  2. The federal government is not providing data to the public on complaints about these drug plans.
  3. Five of these plans are operating but not licensed in California ; two are not licensed anywhere.

The PDPs are only loosely overseen by the federal agency responsible, The Centers for Medicare and Medicaid Services (CMS). The law that established the Medicare Part D program attempted to pre-empt state regulation of them. But, the federal government has had its hands full getting the program off the ground and has demonstrated so far little ability to or interest in overseeing their work. CMS has allocated only two employees to oversee all plans nationally – even with all of the problems – making it crucial for California draw on its knowledge and experience with plans and insurers to exercise regulatory authority where appropriate.

With such lax oversight at the federal level, the care is clear for a more aggressive effort by the state of California to ensure that seniors and people with disabilities have consumer protections. A copy of the brief is available at the Health Access website, at:


Senior, health, and consumer groups urged Governor Schwarzenegger to sign key legislation that would offer consumer protections for seniors and people with disabilities in the new federal Medicare Part D.

Gov. Arnold Schwarzenegger has until midnight September 30th to act on bills that would have the state use its authority to place some state oversight over the newly-created prescription drug plans in the program.

The pending bills are:

  • AB 2170 (Chan) calls for information on the performance of prescription drug plans to be included in a report card for California consumers.
  • AB 2667 (Baca) allows the state to monitor Part D prescription drug plans, and to use the state’s ability as a purchaser and contractor to penalize those plans with bad records.

The two bills on Medicare Part D creatively use the state’s authority to provide some consumer protections for these newly-created prescription drug plans. Creating a report card similar to what is done for HMOs, the state can act as a collector and publisher of information. Having the state use it authority as a contractor (through Medi-Cal, CALPERS, etc.) can also discourage “bad actors” from coming into California .

This oversight is important given the problems that have been faced, some of which can be traced back to some of these private plans. In the first eight months of the Part D program, beneficiaries encountered widespread difficulties in obtaining their necessary prescription drugs at affordable prices under the new federal program. Especially hard-hit were vulnerable Medi-Cal beneficiaries who were automatically converted to the new program on its first day. Beneficiaries and pharmacists encountered many computer errors that showed incorrect eligibility for people and inaccurate cost-sharing requirements. Seniors and people with disabilities have had issues being able to get information from the plans about the formularies, participating pharmacies, and other issues. With this backdrop, advocates call any attempts at state oversight essential.

For more information on Medicare Part D, contact Elizabeth Abbott, Policy Director, 916.497.0923 or

Health Access California promotes quality, affordable health care for all Californians.
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