On Tuesday, two economists wrote in an opinion piece for the Wall Street Journal that Medicare benefits are being reduced by President Joe Biden’s so-called Inflation Reduction Act, which reduces payments for seniors’ prescription medicines.
This was written by Casey B. Mulligan & Tomas J. Philipson:
President Biden has stated that Republicans are plotting to reduce funding for Medicare. As a matter of fact, it is his flagship law, the Inflation Reduction Act, that would cause reductions in benefits and hikes in premiums for the elderly. The popular Medicare medication coverage program is scheduled for a painful amputation.
Plans under Medicare’s prescription medication program, known as Part D, now use three income streams to pay for prescriptions: patient copayments, premium contributions from plan members, and government subsidies. The Inflation Reduction Act calls for significant reductions in both government subsidies and patients’ out-of-pocket costs beginning in 2025. Insurance rates will have to rise to cover the shortfall. While this third revenue stream is supported, the law prevents it from growing by more than 6%. That scarcely even offsets inflation, much less the other two income shortfalls.
We anticipate a $30 billion reduction in plan subsidies beginning in 2025 out of total revenues of around $110 billion. This reduction will mostly affect reinsurance subsidies for beneficiaries with the highest prescription consumption. Something will have to give now that $30 billion is no longer available for funding pharmaceutical medications. Plans’ existing profits are simply too low to bridge the gap between costs and revenues made possible by the Inflation Reduction Act.
Despite rejecting, in his first week in office, former President Trump’s executive order to lower the prices of insulin and epinephrine, Biden has claimed to seek to reduce the costs of prescription medications like insulin.
Since Sen. Rick Scott (R-FL) wants to renew all government spending at regular periods, he and his party alleged during the midterm elections that Republicans plan to abolish Social Security and Medicare.