Cutting Medicare and Diverting its Funds – An Unfortunate Biden Legacy

How will history view Joe Biden’s healthcare policies?

Will people remember that he took the benefits of Operation Warp Speed and imposed mandates, supported school closures, and caused increased vaccine hesitancy? Or that his administration called doctors and scientists who dared to ask questions (such as nominees for the heads of the Food and Drug Administration and the Centers for Medicare & Medicaid Services) — purveyors of “misinformation”?  Or that he bragged about imposing price controls on innovative biopharmaceuticals? 

Most likely. Perhaps Biden will also be remembered as the first president to raid Medicare (while claiming to protect it) to pay for his spending agenda. Biden spent like no president in history, and, with a sleight of hand, by taking hundreds of billions out of Medicare and spending it on green energy subsidies. 

This legacy needs to be highlighted and its consequences explained so policymakers never go down this path again.

Some have forgotten that the wrongly called “Inflation Reduction Act” was a mega-spending bill originally called the Build Back Better Act. Team Biden decided to give it a new name for marketing purposes and to address the nation’s raging inflation rate. This “Inflation Reduction Act” did nothing to reduce inflation.

Deep inside the legislation was a longtime Democratic policy dream:  price controls masquerading as “Medicare negotiation.” Those mandates gave Biden a campaign talking point that he was a good steward of government funds by forcing “negotiation” and lowering drug prices.

As the CEO of the Missouri Pharmacy Association, Ron Fitzwater, wrote, “The Biden-Harris administration is not protecting Medicare; they’re stealing from it.”

He added, “Through this distortion of the market, the IRA has diverted nearly $260 billion from the projected Medicare ‘savings’ to pay for special interest handouts like large tax credits for costly electric vehicles, enormous subsidies paid to big health insurer-PBM corporations, and funding health care programs for illegal immigrants.”

One of the most significant healthcare successes was spearheaded by the George W. Bush administration: the Medicare Part D Program. The Donald Trump administration strengthened Part D and lowered Medicare premiums. Sadly, the Biden IRA went in the opposite direction. As Ge Bai wrote in Forbes in November, “While average basic premiums for Medicare Part D declined by 12 percent from 2017 to 2020, plan bids for 2025 nearly tripled, partly due to this and other aspects of benefit redesign.”

According to the Congressional Budget Office, the Inflation Reduction Act is projected to reduce Medicare spending by $237 billion through 2031. However, as Tomas Philipson, a former chair of the White House Council of Economic Advisors, wrote in the Wall Street Journal last year, “Mr. Biden’s Medicare cuts aren’t limited to the Inflation Reduction Act. In April, the White House cut Medicare Advantage payments for the second year in a row. These cuts will reduce seniors’ benefits by nearly $400 per year.”

He added that the IRA will raise annual out-of-pocket costs for 3.5 million Medicare beneficiaries who take price-controlled medicines and that cost increases will result from the interaction of price controls with new rules on how Medicare drug plans design their benefits.

Interestingly, Biden never discussed where the money redirected from Medicare went — like green energy projects. Perhaps the political staff in the White House knew how seniors would react. But all Americans should understand this “bait and switch” so it never happens again.

2025 offers a chance to take genuine steps to help seniors by strengthening Medicare, eliminating waste in Medicare Advantage, rolling back price controls, and fixing the IRA’s “pill penalty,” which reduces access to life-saving medicines for those most in need. 

Of course, 2025 will likely also be the year the White House and Congress achieve meaningful Pharmacy Benefit Manager Reform, which was on the cusp of passage at the end of the last Congress.

In his ill-fated debate performance last June, Biden inadvertently said, “We finally beat Medicare.” 

Let’s ensure that in the coming years, we never put Medicare at risk again.  Instead, let’s resolve to pursue commonsense reforms that improve the quality of life for our seniors and help all Americans lead healthier lives.

Jack Kalavritinos, is the founder of JK Strategies and a former senior OMB, HHS and FDA official in the Bush and Trump Administrations. He wrote this for InsideSources.com.

Reprinted with Permission from DC Journal – By Jack Kalavritinos

The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.