President Biden’s so-called Inflation Reduction Act will “amputate” prescription drug coverage through Medicare, according to two economists who served in the Trump administration.
In an op-ed for the Wall Street Journal, University of Chicago economists Casey B. Mulligan and Tomas J. Philipson claimed that Biden’s sweeping spending law will “thoroughly upset tens of millions of elderly voters” before the 2024 election.
Biden cutting Medicare?
Medicare Part D, which is provided by private insurers contracting with the government, is financed through out-of-pocket costs, premiums, and government subsidies, but all three revenue streams will be cut under Biden’s law, the economists said.
The Inflation Reduction Act limits out-of-pocket Part D drug costs to $2,000 starting in 2025, and caps Part D premium growth at 6 percent a year.
“That’s hardly enough to cover inflation, let alone compensate for the other two revenue losses,” the economists wrote.
The Inflation Reduction Act will also leave plans paying more for coverage beyond the out-of-pocket cap. The economists estimated a $30 billion cut in state subsidies for those with catastrophic coverage, leaving private plans under pressure to cut benefits or exit the market.
“With $30 billion less to finance prescription benefits, something will have to give. Plans currently have far too little profit to span the chasm that the Inflation Reduction Act opens between expenses and revenue.”
More misleading Biden rhetoric
Ironically, Biden — as Democrats have done for years — has vehemently accused Republicans of wanting to cut Social Security and Medicare. By 2024, it will be apparent “which party is cutting Medicare,” the economists wrote.
“By September 2024, the presidential campaign will be in high gear at the same time that beneficiaries begin to consider their 2025 Medicare enrollments. That’s when the Inflation Reduction Act will thoroughly upset tens of millions of elderly voters,” they wrote.
The Inflation Reduction Act also imposes a $35 monthly cap on insulin and allows the government to negotiate the prices of some prescription drugs. While Biden has bragged about these provisions, he actually cancelled an executive order from President Trump lowering insulin costs.
In addition to healthcare spending, the Inflation Reduction Act includes billions in new spending on climate change and a massive $80 billion expansion to the Internal Revenue Service (IRS).
Despite its title, the Inflation Reduction Act isn’t expected to have a significant impact on inflation, which is crushing many seniors.