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.