Seniors perusing the offerings during the most recent Medicare Enrollment Period saw that not only were prescription drug plan premiums higher, but their choices of plans were fewer.
Data compiled by Ed Haislmaier, a health care policy analyst at The Heritage Foundation, and Joel White, the president of the Council for Affordable Health Coverage show the IRA’s changes to Medicare have not only sent “premiums sky-high,” but eliminated plans for at least 3 million seniors.
IRA Cost Shifting
The diminished options are rooted in the Biden administration’s signature legislative achievement: the 2022 Inflation Reduction Act (IRA). Known primarily for its provisions supporting a slew of green-energy climate initiatives, the IRA also contained far-reaching changes to Medicare.
The centerpiece of the IRA’s Medicare provisions was the White House and congressional Democrats’ plan to rein in the cost of prescription drugs, covered under Medicare Part D, by mandating out-of-pocket spending caps. At the same time, the IRA reduced most of Medicare’s funding for high-cost drug reinsurance ultimately shifting that burden to Part D insurers. Insurers responded by passing those costs on in the form of higher premiums.
IRA Pitched as Financial Relief
The Department of Health and Human Services (HHS) under President Joe Biden currently presents a favorable view of the IRA’s Medicare provisions.
“This new law provides meaningful financial relief for millions of people with Medicare by expanding benefits, lowering drug costs, and strengthening Medicare for the future,” HHS states on its website.
The potential for higher drug premiums at least did not go unnoticed. KFF in January 2023 provided an analysis of the bill. “With the new hard cap on out-of-pocket spending, it is possible that enrollees could face higher Part D premiums resulting from higher plan liability for drug costs above the spending cap, though these premium increases could be mitigated by the provisions to stabilize premiums between 2024 and 2030. Plans will likely face financial incentives to exercise greater control of costs below the new spending cap, such as through more utilization management or increased generic drug utilization, which could help to limit potential premium increases.”
In addition to raising premiums, another way plans could “exercise greater control of costs” is to not participate in Medicare Part D all altogether, which Haislmaier and White would discover in their 2024 analysis.
Premiums Up 57 Percent
The promised relief in prescription drug costs has not materialized, Haislmaier and White conclude.
“The data shows that under four years of Biden-Harris administration policies (plan years 2022 through 2025), the national average monthly premium paid by Medicare beneficiaries for stand-alone Part B prescription drug plans has increased by 57%,” Haislmaier and White write in the Daily Signal.
“At the same time, the average number of plans offered in each state has dropped by more than one-half, from 29 in 2021 to 14 in 2025. Seniors in some states face even bigger hits in their wallets,” the authors write. “Under the Biden-Harris administration, Medicare drug plan premiums jumped by more than 90% in 10 states. Premiums more than doubled in three of those states (California, 122%; New York, 116%; and Nevada, 104%.)”
When premium prices were unveiled in October 2024 for the 2025 year in the run-up to the November 5 election, the Biden administration unveiled a demonstration project that will pay insurers not to raise Part D premiums by more than $35 a month in 2025. According to the Congressional Budget Office (CBO), the demonstration project will cost taxpayers $7 billion in 2025, with the program set to run for two more years.
New Scrutiny?
The demonstration project was carried out without congressional authorization. This circumvention of Congress, along with the program’s high cost, could put it in the crosshairs of the newly created Department of Government Efficiency (DOGE).
The DOGE is an outside-of-government advisory commission headed by entrepreneurs Elon Musk and Vivek Ramaswamy and directed by President-elect Donald Trump to identify wasteful spending across the federal government. The department has no statutory authority to defund the demonstration project but can make recommendations.
“Seniors have been repeatedly assured that Medicare will be there for them throughout their retirement years, but it’s not the same Medicare,” said Craig Rucker, president of the Committee for a Constructive Tomorrow (CFACT). “Costs rise, quality declines and choices disappear. Between the social engineers of the Biden administration and the inertia of career bureaucrats at HHS, Medicare has degenerated into an empty promise.”
Bonner Russell Cohen, Ph.D., (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.
Internet info:
Edmund Haislmaier and Joel White, “Biden-Harris Admin’s Medicare Shock for Seniors,” The Daily Signal, October 14, 2024: https://www.dailysignal.com/2024/10/14/biden-harris-admins-medicare-shock-for-seniors/
