Jacob Gardenswartz
“As vice president, Kamala Harris cast the tie-breaking vote to cut, as you know, Medicare by $273 billion. She cast a vote to cut Medicare.”
— Former President Donald Trump at a July 24 marketing campaign rally in Charlotte, North Carolina.
During a July 24 campaign rally in Charlotte, North Carolina, former President Donald Trump claimed that Vice President Kamala Harris was accountable for passing laws within the U.S. Senate to chop Medicare spending by practically $300 billion.
“As vice president, Kamala Harris cast the tie-breaking vote to cut, as you know, Medicare by $273 billion,” Trump instructed rally attendees. “She cast a vote to cut Medicare.”
Trump gave no additional rationalization for which vote he was referring to or how he arrived at that determine. A marketing campaign spokesperson instructed KFF Health News in an e mail that Trump was referring to a statistic from a Wall Street Journal op-ed by Tomas Philipson, a University of Chicago economist and a former Trump administration official.
Philipson’s op-ed argued that the Inflation Reduction Act — a sweeping local weather and well being care measure handed in 2022 for which Harris forged the tie-breaking vote — would hurt Medicare sufferers by driving up prices. His article cited a Congressional Budget Office analysis exhibiting that the measure’s well being care provisions would scale back the federal deficit by $237 billion over 10 years. “(M)ost of that reduction comes from the program spending less on prescription drugs,” Philipson wrote.
But the federal government’s spending much less on Medicare applications wouldn’t quantity to the form of “cut” to Medicare advantages Trump implied, consultants instructed KFF Health News. Several provisions within the regulation pertaining to prescription drug pricing are extensively seen by well being coverage consultants as useful to each customers and the federal government. Individual sufferers are anticipated to spend much less out-of-pocket on their prescribed drugs, whereas the federal government will cut back Medicare spending with none affect to companies supplied.
We dug into the information surrounding Trump’s declare and the regulation’s impact on Medicare. It resurfaces a long-running debate over Medicare savings versus cuts and the query of whether or not lowered spending robotically results in a discount in advantages for Medicare enrollees.
Following the Numbers
The Inflation Reduction Act’s many provisions embody some meant to decrease prescription drug prices for older Americans and others receiving Medicare insurance coverage protection.
The regulation caps the cost of insulin at $35 per 30 days for many Medicare beneficiaries, establishes out-of-pocket spending limits for Part D drug protection, and institutes penalties for drug corporations that elevate costs sooner than the inflation price. The regulation additionally authorizes Medicare officers, for the primary time, to barter drug pricing immediately with pharmaceutical producers.
“The idea behind drug price negotiation is that Medicare can use its buying power to get a better price than what is currently being negotiated for these drugs,” mentioned Juliette Cubanski, deputy director of this system on Medicare coverage at KFF, a well being data nonprofit that features KFF Health News.
According to an analysis by the Congressional Budget Office, the nonpartisan federal company that calculates the monetary affect of latest laws, the Inflation Reduction Act’s well being care measures could have a blended impact on spending. Some steps, such because the cap on beneficiaries’ out-of-pocket prescription drug spending, will probably value the federal government extra. But others, together with the drug worth negotiations, are projected to save lots of the federal government cash. All instructed, the Inflation Reduction Act’s well being care measures are anticipated to save lots of taxpayers $237 billion over 10 years.
On the numbers, Trump mentioned the regulation would “cut Medicare” by $273 billion; he probably meant $237 billion.
Despite the federal government being anticipated to spend much less total, beneficiaries’ companies wouldn’t essentially be minimize, as Trump claimed. In truth, most Medicare recipients would probably see their prices lower, too, whereas holding the identical stage of advantages.
“There are big shifts in who’s paying for what,” mentioned Andrew Mulcahy, a senior well being economist who researches prescription drug markets on the Rand Corp., a nonpartisan suppose tank. “But that doesn’t mean they’re getting any less. If anything, they’ll have better access to drugs.”
Cubanski, echoing Mulcahy, mentioned: “When you’re reducing Medicare spending, that’s not the same thing as a cut to Medicare or cutting Medicare benefits. If you buy eggs every week and now you’re getting them cheaper, you’re still getting the eggs, you’re just getting them for a lower price.”
A yr in the past, the Centers for Medicare & Medicaid Services named the first 10 drugs on which it is going to focus, although the precise financial savings from the drug pricing negotiations course of might be recognized solely when the federal government and drug producers attain agreements. The new pricing for this primary batch of medicines is ready to take impact in 2026.
Whether the federal government can negotiate meaningfully decrease prices versus present costs is unclear, particularly since pharmacy profit managers, or PBMs — middlemen within the negotiations amongst drug corporations, insurers and pharmacies — are tasked with doing that.
“I think for many of the drugs selected in the first year, my expectation is that the government won’t be able to do much better than the PBMs,” Mulcahy instructed KFF Health News.
The Medicare drug pricing program might have unfavourable negative effects. Philipson, for instance, argued in his op-ed that the negotiations will “deter companies from developing new medicines” and threaten older Americans’ entry to medical doctors, as producers and hospitals would probably be reimbursed much less for his or her medicine and companies.
Cubanski disregarded such issues.
“The drug industry certainly has a vested interest, you know, in raising alarm bells,” she mentioned. “I think it’s just still too early to talk about ‘the sky is falling’ with regard to pharmaceutical innovation. Time will tell, but it certainly is the case right now that the law includes a lot of provisions that will be very helpful for Medicare beneficiaries.”
On Aug. 15, CMS announced the results of its negotiation over the primary spherical of medicine. The new costs characterize reductions starting from 38% to 79% of the unique prices. White House officers mentioned the negotiations will result in $6 billion in financial savings for Medicare the primary yr, whereas Medicare recipients are anticipated to save lots of a further $1.5 billion in out-of-pocket prices.
Our Ruling
Trump’s assertion is mistaken each on the exhausting numbers and his interpretation of what they imply.
The evaluation Trump cited, per his marketing campaign, mentioned the Inflation Reduction Act’s well being care provisions would decrease the deficit by $237 billion — not $273 billion, as the previous president claimed. Moreover, regardless of the actual quantity is, a number of consultants pushed again in opposition to the notion that the financial savings equated to a “cut” to Medicare, as Trump claimed.
We price Trump’s declare False.
Our Sources
Centers for Medicare & Medicaid Services, Fact Sheet: Medicare Drug Price Negotiation Program Revised Guidance, June 2023.
Centers for Medicare & Medicaid Services, Medicare Drug Price Negotiation.
Program: Selected Drugs for Initial Price Applicability Year 2026, August 2023.
The Wall Street Journal, “This Is How President Biden ‘Beat Medicare,’” July 9, 2024.
Congressional Budget Office, Estimated Budgetary Effects of Public Law 117-169, to Provide for Reconciliation Pursuant to Title II of S. Con. Res. 14, Sept. 7, 2022.
Congressional Budget Office, How CBO Estimated the Budgetary Impact of Key Prescription Drug Provisions in the 2022 Reconciliation Act, February 2023.
C-SPAN, “Former President Trump Campaigns in Charlotte, North Carolina,” July 24, 2024.
Email trade with Karoline Leavitt, nationwide press secretary for Donald J. Trump for President, July 29, 2024.
KFF Health News, “Trump Is Wrong in Claiming Full Credit for Lowering Insulin Prices,” July 18, 2024.
Phone interview with Andrew Mulcahy, senior well being economist at Rand Corp., July 26, 2024.
Phone interview with Juliette Cubanski, deputy director of this system on Medicare coverage at KFF, July 29, 2024.
United States Senate, Roll Call Vote 117th Congress-2nd Session, Aug. 7, 2022.