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Medicare Insurer Bailout Exposes Failures of the IRA

Posted on Tuesday, September 3, 2024
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by Outside Contributor
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In a move that lays bare the flaws of the Inflation Reduction Act, Medicare officials just scrambled to announce a federal subsidy that could total $23 billion yearly to prevent Medicare’s prescription drug benefit from collapsing.

In a classic case of unintended — if utterly predictable — consequences, this insurer bailout shows how the IRA ends up harming the seniors it was supposed to protect. Making matters worse, Medicare’s maneuvers to cover up the facts of the IRA’s failures expose the essential dishonesty of typical Washington politics.

Knowing the IRA would be judged by patient out-of-pocket costs for prescription drugs and recognizing that the legislation did nothing to reduce the cost of providing prescription medicines, Medicare responded by… shifting the deck chairs. If patients would pay less for medicines on the back end at the pharmacy counter, Medicare would get its pound of flesh from those same patients on the front end in the form of increased monthly premiums.

The facts: The IRA has caused a dramatic drop in Medicare prescription drug plans, with almost 100 fewer standalone plans available this year than in 2023. Medicare announced earlier this year that the national average bid amount for drug coverage from the remaining providers increased from $64 in 2024 to nearly $180 in 2025. Bid rates are linked to premiums, and Medicare officials faced the prospect that premiums could triple just one month before the presidential election.

You read that right; the IRA, as written, would have hit seniors with massive premium hikes. Did Democrats know what they were voting for in 2022?

Some may have. If so, they also knew they couldn’t pass the IRA by openly adding billions annually to the national debt to keep premiums from crushing seniors — mainly because they needed the money they were diverting from Medicare for other subsidies like tax credits for electric vehicles. So they kept mum, counting on unelected bureaucrats to do the job.

Problems with the IRA are not limited to premium increases for millions of Americans. Patients also face new limits on drug access in Medicare Part D. Seniors face onerous new pre-approval requirements for medications. And in many cases, doctors’ first-choice treatment recommendations get short-shrift from insurers pushing medications that make them more money.

The long-term effects of the IRA will be even worse. The law stifles the innovation critical to tackling the as-yet unmet needs of patients suffering from chronic diseases, cancers and Alzheimer’s. It takes, on average, more than $2 billion to bring a safe and effective treatment to patients. The IRA’s drug price provisions have raised grave doubts among drug makers about their ability to meet the costs of drug discovery and make a return on investment to fund the next cycle of research.

Already, at least 36 research programs and 21 drugs have been abandoned since the IRA passed. According to a University of Chicago study, this policy will rob Americans of 135 life-saving medicines over the next 15 years.

For now, though, Medicare’s insurer bailout isn’t a real solution. At best, it’s a scheme to hide the IRA’s failures until after the election. The law, as designed, would require unsustainable annual fixes in the $20 billion range in perpetuity. At worst, this move is part of a relentless push by progressives toward a single-payer health system, where the federal government pays the bills — at least until the tax man comes knocking.

It’s time for policymakers to stop focusing on partisan short-term fixes and implement real long-term policies to protect seniors and make Medicare Part D sustainable.

Reprinted with permission from The DC Journal by Anthony Zagotta.

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

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PaulE
PaulE
1 month ago

It’s NOT a big shock to anyone who bothered to read the text of the IRA beforehand, that it was loaded with a myriad of bad “progressive” policies destined to cause more problems than solve anything. Americans, at this point should, should always expect that to be the norm when it comes to massive Democrat spending bills. The empty and false promises from the Democrat politicians about how great this or that will be always ends up meaning there is a big, fat, undisclosed cost to be paid by the American taxpayers on the back end. This is how the game has consistently worked for decades. Yet at least half the country is dumb enough to keep falling for it over and over again. As Tom Hanks said in the movie Forrest Gump, “You can’t fix stupid.”. The Democrat Party thanks their stars every night that the Democrat voter base proves it true every two, four and six years. Otherwise, they would all be out of a job.

Melinda
Melinda
1 month ago

I’m so glad I decided years ago to not get Part D. I do take a couple of meds, but they are cheap enough. I try to stay healthy and avoid pharmaceuticals, prefer natural remedies. It’s a gamble, but so is relying on a broken government.

Lover of America and GOD!
Lover of America and GOD!
1 month ago

Was another way the Demo-rat way to screw the middle and lower class!

anna hubert
anna hubert
1 month ago

A patient is the last component in the monstrous machinery run by government. Too many unnecessary parts. Simple and user friendly is not in the vocabulary and never will be.

Kyle Buy you some guns,and learn how to shoot
Kyle Buy you some guns,and learn how to shoot
1 month ago

I’m from the Govt. We have a solution for everything. Kyle L.

MariaRose
MariaRose
1 month ago

Wow, asking elected legislators to plan long-term solutions over quick line-their-pockets solutions is such a new concept! what’s the world coming to if we, the taxpayers demand long-term solutions

Who
Who
1 month ago

Reckless abandon?; hopefully there’s a real hero who cares that will save the day.

cam
cam
1 month ago

Whenever the government comes in with their arbitrary dismantling garbage we need to scream STOP. They come up with such nonsense just to enriched themselves, and the bureaucratic ideologists.

johnh
johnh
1 month ago

We pay payroll taxes for Medicare, so it that in a Trust Fund the same as Social Security? And are Medicare taxes paying the way or is Medicare losing money evey year?

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