As Medicare Open Enrollment begins this week, new Biden administration data shows that seniors’ prescription drug costs have skyrocketed 31% since the Inflation Reduction Act’s passage in 2022.
This spells trouble for candidates in 2024 battleground races who backed the law and routinely claim it is reducing drug costs for seniors.
Credit: Handout
Credit: Handout
The new Medicare data flatly contradicts Vice President Kamala Harris’ recent assertion that the Inflation Reduction Act has “cut prescription drug costs” and “reduced premiums for seniors.”
It’s also unhelpful Sens. Jacky Rosen, D-Nev., Sherrod Brown, D-Ohio, Bob Casey, D-Pa., and Jon Tester, D-Mont. All are in tight races and have seen severe Medicare rate hikes since the law passed two years ago.
Democrats often use the Inflation Reduction Act’s $35 cap on insulin to imply it is reducing overall drug costs, but that’s a red herring.
Insulin isn’t taken by most seniors, and it’s just one of thousands of drugs covered by Medicare. In marketing terms, the insulin cap is a “loss leader” that helps some patients but doesn’t reflect lower costs overall.
Premium hikes, on the other hand, raise costs across-the-board for all seniors, regardless which drugs they’re prescribed.
Alarmingly, rates for Medicare Prescription Drug Plans ‘risen four times more than the national rate of inflation since the IRA was enacted. In some battlegrounds, its risen eight or nine times higher.
Georgia’s rate rose from $46.05 to $73.42. That’s a 59% increase. The national average rose from $47.69 to $62.34 for a 31% increase.
Next year’s prescription drug premiums were set to jump even further until the administration stepped in with a preelection, $7 billion bailout for plans that agreed to cut rates.
This cash infusion should’ve been unnecessary because the Inflation Reduction Act reduced federal spending on Medicare drugs by almost $300 billion. There should have been plenty of funds available to improve benefits and reduce costs for seniors.
Unfortunately, however, the law dedicates none of its prescription drug savings to helping seniors, according to the Congressional Budget Office.
Instead, the Medicare savings are diverted to help underwrite other Inflation Reduction Act spending, including a trillion dollars of green energy subsidies. The law grants $7,500 credits to millennials for electric cars but no such relief to seniors at the pharmacy counter.
Once one realizes the Inflation Reduction Act’s Medicare savings (including future proceeds from government “negotiations” of drug prices) are designed to fund outside programs, it’s clear why the Inflation Reduction Act can only increase seniors drug costs.
It saddles Medicare plans with a mountain of new red tape, liabilities and mandates but dedicates no funding to pay for any of this.
That makes it inevitable that plans raise rates to cover their costs.
Now Harris and other Democratic candidates must convince seniors that the higher drug costs of the past two years have nothing to do with their vote to change Medicare Part D two years ago.
Good luck with that.
Mark Merritt has been a senior executive in several health industry groups and is Founder of Medicare is for Seniors.
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