The Wall Street Journal
’Tis the season for election handouts. On Friday, the Biden Administration announced lower Medicare prescription drug premiums, which will naturally be paid for by taxpayers. The political irony is Biden officials are increasing subsidies to insurers they otherwise vilify to mitigate pre-election harm from the Inflation Reduction Act.
The Centers for Medicare and Medicaid Services (CMS) touted in a press release that average Part D premiums will decline by about $90 next year while benefits will improve “thanks to the Inflation Reduction Act and other new enhancements.”
P.S.: Seniors can show their gratitude by voting for Democrats.
Recall how Democrats sought to reduce Medicare drug spending by capping patient out-of-pocket costs at $2,000 annually and shifting more of the entitlement’s cost to insurers. CMS also sweetened benefits with regulatory tweaks. But Democrats failed to appreciate there’s no such thing as a free entitlement expansion.
Insurers projected Part D premiums would balloon next year, when the $2,000 cap and other freebies kick in. Providing basic Part D benefits next year is estimated to cost $179.45 a month on average, up from $64.28 this year and $34.71 in 2023, according to CMS.
CMS uses a complicated formula to subsidize premiums, but healthcare analysts projected premiums would rise by hundreds of dollars. Some insurers warned they might exit the market to avoid losing money. Seniors are notified of the premium spikes before open enrollment begins in mid-October. Talk about a surprise bill.
To head off this self-induced political mess, CMS launched this summer a “demonstration project” to “stabilize” the market that involved boosting payments to insurers. Congress in 1967 allowed Medicare to test new payment models to improve the efficiency of healthcare delivery, but such projects are supposed to be implemented on a small scale.
This Biden project 2025 instead rewrites the IRA to spend money Congress didn’t appropriate to fix Democrats’ handiwork. CMS says nearly all insurers signed up for its program, which is expected to cost about $5 billion. Voila, CMS says Part D monthly premiums will decline next year by $7.45 to $46.50. It’s good to be President.
Biden officials may have drawn inspiration from their Obama predecessors, which in 2010 stood up a demonstration project that boosted payments to insurers to prevent Medicare Advantage premiums from spiking owing to cuts Democrats made to the program in ObamaCare. Those subsidies were projected to cost $8 billion over three years.
The Government Accountability Office wrote in 2012 that the project “dwarfs all other Medicare demonstrations — both mandatory and discretionary — conducted since 1995 in its estimated budgetary impact and is larger in size and scope than many of them.”
The Biden IRA patch dwarfs that 2012 fix in size, scope and budgetary impact.
Democrats in Congress and the press rightly slammed the Trump Administration in autumn 2020 for floating a demonstration project to send seniors $200 drug discount cards before the election. But no one cares when a Democrat is abusing executive power and taxpayers to win the senior vote.