Seniors dread this regulate of year, when they run out of Medicare drug coverage and have to pay out of pocket. Some just stop taking their drugs

by Arlene Weintraub

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For many persons older Americans, this is a bitter time of year through a deceptively sweet name: the "doughnut hole."

It’s not a treat from the local bakery, but more readily a coverage gap in the three-year-old Medicare Part D drug program. When Part D was first designed as a way to help somewhat old patients pay for their prescription drugs, the only way the federal conduct could spare it was to prescribe a yearly limit on which it would cover for each member. So one interval seniors consume drugs up to that opening—it is $2,510 in 2008—they fall into the doughnut hollow. They then require to pay fully out of pocket for their drugs to the time when the end of the year, or until they’re legally qualified beneficial to catastrophic coverage, whichever comes first.

The doughnut opening has been a source of angst ever since Part D began in 2004. Now we know why: One way seniors deal with being in the hole is to stop taking their drugs.

More than 3 Million Affected

Only recently have pollsters been able to quantify the fallout of the doughnut cave. In August, the Henry J. Kaiser Family Foundation released results of a survey showing that in 2007, 26% of Part D beneficiaries—3.4 million people—reached the doughnut hole. Part D plans are offered and managed by private security against loss companies, likewise the particulars differ among the 1,600 or such plans that are suitable. But on average, Part D patients who fell into the doughnut hole saw their monthly out-of-pocket costs hollow to $196.

Even more alarming was that the study found 15% of people through chronic illnesses stopped taking drugs during the time they were in the coverage gap. "High drug costs are a barrier, but this is the first time we’re seeing it documented so plainly," says Tricia Neuman, vice-president at Kaiser Family Foundation, a Menlo Park (Calif.) health research construction. "This raises concerns about the consequences for people with serious chronic conditions."

So what is the purpose of the doughnut hole exactly? It was the only solution to a simple problem: The federal government, which is expected to squander betwixt $395 billion and $534 billion on Part D benefits through 2013, didn’t allocate a swelling enough lot to the program to subsidize an unlimited supply of drugs for each beneficiary. Some of the insurance companies that sell Part D plans offer options that cover drugs for the period of the gap. But, says David Certner, legislative prudence director toward AARP, "those plans cost more and they only cover generic drugs."

Reconsidering Retirement

Since seniors already have to pay premiums and co-pays on their Part D plans, many choose to venture falling into the hole the more in this way than to pay more with respect to the chance of staying out of it.

Larry Kay of Yukaipa, Calif., is having so much trouble affording the doughnut hole that he’session thinking about coming out of retirement. Kay, a former quality-control inspector for a fencing company, hit the hole in May and is now profitable $650 a month for drugs to delight his ostentatious cholesterol and the lung predicament chronic obstructive pulmonary sickness, or COPD. "One is $162, not the same is $226," he says, rattling the exact prices distant from the top of his head with the tone of both familiarity and annoyance. "They don’t have generics."

Kay’s pension of $1,198 per month (after taxes) leaves little left over notwithstanding other essentials. So he has stopped taking his COPD inhaler in the morning, even though he’s not supposed to skip doses. "If my doctor knew, he’d be very upset."

Filling the Hole: Different Ideas

Health policy experts believe that the next Administration will exist under pressure to invocation the doughnut cave, and both candidates possess expressed some support for reforming the program. Senator Barack Obama (D-Ill.) endorses the idea of letting the commonwealth sell drug prices for Part D (it doesn’t have the right to execute so now). Senator John McCain (R-Ariz.) has said that higher-income beneficiaries should pay higher premiums for their Part D plans.

The chipmaker reported record third-quarter earnings, but what really cheered worried investors was the upbeat sales outlook

By Cliff Edwards

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Cash-strapped consumers may be hunkering down for a lean holiday this year, but you wouldn’t know it from results released on Oct. 14 by chipmaker Intel (INTC). The tech bellwether issued a surprisingly upbeat sales outlook for the remainder of the year after reporting minute third-quarter earnings.

Santa Clara (Calif.)-based Intel, the cosmos’s largest chipmaker, predicted current-quarter sales of $10.1 billion to $10.9 billion, in line with the $10.77 billion expected by analysts. And despite investor concerns that profit margins would of little breadth in the same manner with consumers opt in the same manner with antidote to machines sporting less expensive Intel chips, the company indicated gross margins would remain essentially flat at near 59%.

Third-quarter profit also demonstrated resilience. Net revenue rose 12%, to $2.01 billion, or 35¢ a share, from $1.86 billion, or 31¢ a receive, a year earlier. Revenue rose 1%, to $10.2 billion.

Buoyed by Notebooks

Intel CEO Paul Otellini reported the chipmaker is perception early signs of weaker consumer expenditure and besides reductions in orders from companies that distribute its chips. He too said the "pecuniary crisis is creating some signs of stress…but the extent of that is difficult to quantify." Yet he added that inventories of unsold chips are "in sagacious imagine" and that the company is benefiting from demand for notebooks and a new category of products called netbooks, which be like notebooks but are meant mainly for Web surfing.

The remarks and fourth-quarter forecast were enough to soothe investors who had grown concerned that disappointing retail-chain results and a plunging stock market in recent weeks augured weakening demand for computers and the chips needed to run them. Intel shares, which, like the broader Nasdaq stock emporium had retreated in recent days, jumped 6.7%, to 16.99 a share, in extended trading.

Some analysts questioned whether Intel may have been too upbeat, given questions over how long the economic slump may continue. "Right now, Intel is No. 1 with an asterisk in provisions of tech companies best positioned to weather a downturn," says Avian Securities scrap analyst Avi Cohen. "Whether you be persuaded they can receive those numbers or not depends on to what the economy goes from here." Otellini said the joint concern is in a good competitive situation for the reason that it has been focused on improving efficiency for the past two years by slashing head count by 20,000 people worldwide and trimming $3 billion from spending. The company also has $12 billion in turn into money and scant debt. "We’ve made a spacious number of changes in our operations that have prepared us well," Otellini said.

Intel vs. AMD

Intel appears to be more insulated from housekeeping woes than other tech companies because of its outsize market allotment in the fast-growing notebook chip place of traffic, an area where oppose Advanced Micro Devices (AMD) has struggled to compete. The smaller chipmaker has been burdened by debt associated with its purchase of graphics chipmaker ATI and the distraction of a broad restructuring that resulted in a recent decision to hive right side its manufacturing business (BusinessWeek.com, 10/08/08).

The tech rural scene is quickly dividing into haves that remain upbeat hither and thither their prospects and have-nots exposed to poorly performing areas of the economy. Cisco Systems (CSCO) CEO John Chambers, speaking on Oct. 14 at a Florida conference sponsored by Gartner, said the company isn’t planning any cutbacks in spending or cane levels. Hewlett-Packard (HPQ) executives likewise have said they expect to see continued solidity in the current quarter. Results at IBM (IBM) are also holding up. By contrast, Dell (DELL) and SAP (SAP), which are more vulnerable to the slowdown in incorporated spending, have painted a gloomier picture.

Otellini noted that unlike for the time of the dot-com meltdown that erased tech earnings earlier this decade, emerging markets such as China last relatively strong. During a downturn, companies around the world also will be looking for ways to drive costs out of their operations and will endeavor the latest tech innovations and services in doing so, he said. "Technology will probably do well during a downturn just because of the simple event that we sell tools of productivity," he said.

Investors won’t have to wait until fourth-quarter results are released in January to see whether Otellini’s optimism is warranted. Intel scheduled each early December update—its pristine mid-quarter report in more than a year—to proposal a clearer assessment of market conditions.

General Motors thinks Chrysler’s products could help increase sales as well because boost profits by slashing costs

By David Welch

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When news first leaked completely that General Motors (GM) was interested in buying Chrysler from private equity confirmed Cerberus Capital Management, the general recoil from auto-industry watchers was: Are they lacking of one’s wits?

Chrysler’s sales are down 30% and the company is loss specie. Its product lineup is loaded with trucks and sport-utility vehicles and its cars are also-rans. The Chrysler and Dodge brands dress in’t have enough strong passenger cars and crossovers. Even the beloved Jeep brand is suffering as SUV sales have tanked.

But on that to a high degree troubled rural scene, some of GM’s top executives see an opportunity. Chrysler, after all, has managed to sell 1.2 million vehicles so far this year, and it reported $1.1 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first half. But the joint concern admits it is still losing money and burning cash. Chrysler had sales of $61 billion in 2006, the last full year for which it was required to report its financial performance.

Looks Good in continuance Paper

If GM executives determine that Chrysler can be restructured, they think it could have existence a great opportunity to add sales and a handful of good products while boosting profits by slashing costs. Their plan: Grab the tens of billions in Chrysler revenues, cut overhead costs at headquarters, and book a nice profit.

On essay, it all looks good (BusinessWeek.com, 10/11/08). GM gets a nice part of business and eliminates a competitor from the scene, giving each survivor a shot at more sales and better pricing. The hard part will be getting the unison to accept the cuts needed to get to the profitable return stream that GM covets. To put up to sale the benefits of buying Chrysler to its own board of directors and shareholders, GM would take to build a matter of inquiry that the costs that tend hitherward with buying out thousands of United Auto Workers and winding down Chrysler’s bloated chain of dealers won’t stunt the benefits. Concedes one GM charged with execution: "No deal comes without risk."

GM wouldn’t keep the whole company. The biggest of the Big Three likes Jeep, the minivans, the Dodge Ram pickup, and cars take pleasure in the Chrysler 300. Other vehicles, such as far as concerns example the Chrysler Sebring and Dodge Avenger, or swelling SUVs like the Dodge Durango, could recede from view. GM already has strong products for buyers of those Chrysler vehicles.

Workers and Plants Would Be Cut

But here’s where the strategy breaks down. Getting rid of cars GM doesn’t longing property dumping plants and workers, too. Already, there is union opposition to a deal. Appearing Oct. 14 put on WWJ radio in Detroit, UAW President Ron Gettelfinger said he wouldn’t endorse a GM-Chrysler deal because, "I by bodily presence would not want to see anything that would result in a consolidation that would mean the elimination of additional jobs."

Secretary Paulson talked tough about holding executory pay in check under Treasury’s rescue plan. But don’t expect execs to give up much

By Theo Francis

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JPMorgan Chase CEO Jamie Dimon foliage a congregation at the Treasury Dept., Oct. 13 in Washington. Mark Wilson/Getty Images

It was clear early on, as Congress debated legislation to rescue the U.S. financial system, that public anger over the excesses of the financial-services industry would lead lawmakers to palm limits on executory compensation for companies seeking direction help. Now, with the Treasury Dept. laying out its new plan (BusinessWeek.com, 10/13/08) to array as much as $250 billion in U.S. banks and thrifts, the first glimpse of those pay restrictions are becoming clear. They are somewhat tougher than Congress required, but don’t expect them to make much immediate difference—and in the end, it probably won’t cost most numerous executives a cent.

So well-nigh, Treasury has solitary issued a broad account of the rules it will impose on companies in which it invests. Detailed regulations are silent to come. But Treasury generally hewed closely to the bill Congress passed, providing little additional detail. As long as Treasury holds preferred shares and warrants issued in subordination to the reinvigorated program, companies must:

• Make sure incentive pay for top executives "does not animate unnecessary and immoderate risks that portend the value of the financial institution."

• Establish "clawback" provisions requiring top executives to repay bonuses and other incentive pay that were "based upon the body statements of earnings, gains, or other criteria that are later proven to be materially inaccurate."

• Ban certain "golden parachute" packages for departing executives.

• Limit tax deductions adhering top executives’ pay to that which doesn’confidentially exceed $500,000.

No Change in Pay Practices

Strictly discourse, that last item wasn’t requirement—Congress included a similar measure under a different provision of the bill, but Treasury officials declared they chose to apply it under the capital-purchase program. Compensation attorneys say it remains unclear whether Treasury is simply extending an existing march forward tax breaks for executive make payment to, which normally limits non-incentive reparation to $1 million a year for top executives, or limiting a much broader range of pay that includes bonuses and some stock.

Either way, the rules aren’t credible to affect pay for most executives. Consultants and attorneys say the specific restrictions for the most part apply to unusual circumstances, parallel mergers or pecuniary deceit. Even the tax-deduction provision, which could cost companies millions of dollars, probably won’face to face change primary punish practices.

To be an intelligent being why, consider JPMorgan Chase (JPM), that is expected to believe a $25 billion investment from the Treasury. For 2007, the bank said it paid disclosed some $88.63 million in reward for James Dimon, chairman and CEO, and four other top executives. That counts salary, bonus, stock awards, and perks likely covered under the tax-deduction provision. Using the company’session operative tax rate of about 33%, it comes out to perhaps $29 the public in deductions for their pay.

Interpretations of Pay

If Treasury is just lowering the existing $1 million pay limit to $500,000, then JPMorgan would have obdurate $500,000 in burden deductions in 2007—about $165,000 in tax benefit at its 33% powerful tax rate. That’s because only one executive, Dimon, earned other than $500,000 in non-incentive pay: His salary was $1 million.

By contrast, if Treasury is taking a much broader interpretation of pay, JPMorgan would suffer by comparison $28.4 million of deductions, leaving it good $825,000 in deductions. Even that $28.4 million, though, isn’t very impressive. Those lost tax breaks would amount to perhaps a fifth of 1% of the $15.4 billion in net income that JPMorgan reported earning afterwards taxes last year.

A JPMorgan Chase spokeswoman had no comment tardily Tuesday, Oct. 14. "It’s not meaningful," says Pearl Meyer, senior intriguing director of executive-compensation consultant Steven Hall & Partners, speaking generally. Companies "are going to pay people what they need to."

LOS ANGELES - Flames whirled dangerously close to homes Tuesday as gusty Santa Ana winds sent the biggest of southern California’s wildfires flaring in hilly brushlands on Los Angeles’ boreal edge and along subdivisions to the west.

COLUMBUS, Ohio - A federal appeals court on Tuesday ordered Ohio’s top elections official to set up a system by Friday to verify the eligibility of newly registered voters and make the information available to the state’s 88 county election boards.

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Boeing and Machinists union leaders gave widely diverging views Tuesday of the issue that caused two days of resumed talks to collapse, ensuring a continuation of the debilitating strike that has halted airplane collection for more than five weeks.

The company’s top labor negotiator, Doug Kight, related the stumbling block was Boeing’s vision for eventually automating the way airplane parts are delivered to jet-production lines. He insisted the company was willing to do that with minimal impact on the current work virtue of about 2,000 inside the plants who allow, vestige and dispel those parts.

“Time cannot stand still,” said Kight. “It has nothing to do with the elimination of 2,000 jobs.”

But the union’s district president, Tom Wroblewski, rejected the notion his members are Luddites resisting automation. Instead, he uttered, the issue is Boeing’sitting desire to give this be in action to outside vendors.

“We’ve always dealt with technology and we will always extend with technology,” said Wroblewski. “But they didn’t want us to discover that technology. They wanted to give the suppliers the ability to grow within the walls of the company, not us.”

Back in Seattle after the endeavor in Eastern Washington to end the strike deadlocked Monday, Kight said Boeing wants to bring into use technology so similar to radio-frequency identification (RFID) tags — electronic chips containing tracking facts — that can be placed onward pallets so that the system automatically records when parts are brought in and moved around the point.

“You don’t need people to do those things to enter [parts] into a arrangement manually, to contact suppliers to reorder parts,” Kight said.

He said many manufacturers are forward in such technologies.

Although this view of the future implies fewer commonalty in the long press, Kight insisted current workers can subsist reassigned.

He said improvements in the last six years take resulted in 60 fewer parts-delivery jobs, and all those workers desire been switched to other work.

“We’ve proven we have the ability to absorb within our work force those [employees] impacted by improvements in the [parts] delivery action,” Kight said. “We can continue to do that.”

“Freeze in place”

WASHINGTON - Barack Obama and John McCain will both pursue the image of a strong victor in troublesome economic times as they meet Wednesday night for their third part and final presidential debate.

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King County managers told 126 employees today they desire be laid off at the end of the year to remainder. the troubled county budget.

The new layoffs, combined with earlier layoffs and unfilled vacancies, will diminish the county’session total payroll by dint of. about 390 out of nearly 14,000 full-time workers, said Carolyn Duncan, spokeswoman for County Executive Ron Sims.

Another 134 employees were informed they will be laid along June 30 if their programs — supported by six months of “lifeboat” expenditure — don’familiarily receive funding for the rest of 2009. The Sims administration will ask the Legislature instead of authority to keep those programs alive by transferring cash from other shire spending accounts.

The county is cutting back on jobs and services on this account that falling revenues and rising costs have left it $93 million short of that which it would take to maintain current labor levels next year in the general means. Sims submitted a budget proposal Monday that would master general-fund spending from $659 million this year to $644 million next year. The Metropolitan King County Council will vote in succession the budget next month.

Sims’ office said Monday that as divers for the reason that 255 workers might receive layoff notices today, but about half of those positions were already vacant, Duncan said.

Agencies distinctly hard hit include open hale condition, where 45 jobs are being eliminated through layoffs or rubbing, and the Water and Land Resources Division, with 32 jobs.

More layoffs are likely. County Budget Director Bob Cowan said Monday that Sheriff Sue Rahr hasn’t told his office how she plans to achieve $5.4 million in planned cuts and an additional $2.2 million of cuts that will have to be made next June if the county doesn’t have money to extend “lifeboat” programs.

Rahr said Monday she could have being unnatural to eliminate up to 70 jobs, mostly sheriff’s deputies.

Employees being laid off will be offered other jobs with the county allowing that in that place are suitable and funded openings. They are also being offered coaching in writing résumés and applying for outside jobs, Duncan said.

Keith Ervin: 206-464-2105 or kervin@seattletimes.com

WASHINGTON - The Bush administration’s latest effort to resolve the financial crisis embraces an approach it had resisted just a few weeks ago.