“Vice President Kamala Harris forged the tie-breaking vote to chop, as you recognize, Medicare by $273 billion. She forged a vote to chop Medicare.”
— Former President Donald Trump at a July 24 marketing campaign rally in Charlotte, North Carolina.
Throughout a July 24 campaign rally in Charlotte, North Carolina, former President Donald Trump claimed that Vice President Kamala Harris was chargeable for passing laws within the U.S. Senate to chop Medicare spending by almost $300 billion.
“As Vice President, Kamala Harris forged the tie-breaking vote to chop, as you recognize, Medicare by $273 billion,” Trump informed rally attendees. “She forged a vote to chop Medicare.”
Trump gave no additional rationalization for which vote he was referring to or how he arrived at that determine. A marketing campaign spokesperson informed KFF Well being Information in an e mail that Trump was referring to a statistic from a Wall Street Journal op-ed by Tomas Philipson, a College of Chicago economist and a former Trump administration official.
Philipson’s op-ed argued that the Inflation Discount 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 discount comes from this system spending much less on pharmaceuticals,” Philipson wrote.
However the authorities’s spending much less on Medicare packages wouldn’t quantity to the type of “reduce” to Medicare advantages Trump implied, specialists informed KFF Well being Information. A number of provisions within the regulation pertaining to prescription drug pricing are extensively seen by well being coverage specialists as helpful to each customers and the federal government. Particular person sufferers are anticipated to spend much less out-of-pocket on their pharmaceuticals, whereas the federal government will scale back Medicare spending with none influence to providers provided.
We dug into the info 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 Discount Act’s many provisions embody some supposed to decrease prescription drug prices for older Individuals 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 Half D drug protection, and institutes penalties for drug firms 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 concept behind drug worth negotiation is that Medicare can use its shopping for energy to get a greater worth than what’s at the moment being negotiated for these medication,” stated Juliette Cubanski, deputy director of this system on Medicare coverage at KFF, a well being info nonprofit that features KFF Well being Information.
In response to an analysis by the Congressional Budget Office, the nonpartisan federal company that calculates the monetary influence of latest laws, the Inflation Discount Act’s well being care measures may have a combined impact on spending. Some steps, such because the cap on beneficiaries’ out-of-pocket prescription drug spending, will doubtless value the federal government extra. However others, together with the drug worth negotiations, are projected to avoid wasting the federal government cash. All informed, the Inflation Discount Act’s well being care measures are anticipated to avoid wasting taxpayers $237 billion over 10 years.
On the numbers, Trump stated the regulation would “reduce Medicare” by $273 billion; he doubtless meant $237 billion.
Regardless of the federal government being anticipated to spend much less total, beneficiaries’ providers wouldn’t essentially be reduce, as Trump claimed. Actually, most Medicare recipients would doubtless see their prices lower, too, whereas retaining the identical stage of advantages.
“There are massive shifts in who’s paying for what,” stated Andrew Mulcahy, a senior well being economist who researches prescription drug markets on the Rand Corp., a nonpartisan assume tank. “However that doesn’t imply they’re getting any much less. If something, they’ll have higher entry to medication.”
Cubanski, echoing Mulcahy, stated: “If you’re decreasing Medicare spending, that’s not the identical factor as a reduce to Medicare or slicing Medicare advantages. When you purchase eggs each week and now you’re getting them cheaper, you’re nonetheless getting the eggs, you’re simply getting them for a cheaper price.”
A 12 months in the past, the Facilities for Medicare & Medicaid Providers named the first 10 drugs on which it can focus, although the precise financial savings from the drug pricing negotiations course of shall be identified solely when the federal government and drug producers attain agreements. The brand new pricing for this primary batch of medicines is about to take impact in 2026.
Whether or not 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 firms, insurers and pharmacies — are tasked with doing that.
“I feel for most of the medication chosen within the first 12 months, my expectation is that the federal government received’t be capable of do a lot better than the PBMs,” Mulcahy informed KFF Well being Information.
The Medicare drug pricing program may have damaging negative effects. Philipson, for instance, argued in his op-ed that the negotiations will “deter firms from growing new medicines” and threaten older Individuals’ entry to docs, as producers and hospitals would doubtless be reimbursed much less for his or her medication and providers.
Cubanski dismissed such issues.
“The drug business definitely has a vested curiosity, you recognize, in elevating alarm bells,” she stated. “I feel it’s simply nonetheless too early to speak about ‘the sky is falling’ with regard to pharmaceutical innovation. Time will inform, however it definitely is the case proper now that the regulation consists of quite a lot of provisions that shall be very useful for Medicare beneficiaries.”
On Aug. 15, CMS announced the results of its negotiation over the primary spherical of medication. The brand new costs characterize reductions starting from 38% to 79% of the unique prices. White Home officers stated the negotiations will result in $6 billion in financial savings for Medicare the primary 12 months, whereas Medicare recipients are anticipated to avoid wasting a further $1.5 billion in out-of-pocket prices.
Our Ruling
Trump’s assertion is unsuitable each on the arduous numbers and his interpretation of what they imply.
The evaluation Trump cited, per his marketing campaign, stated the Inflation Discount Act’s well being care provisions would decrease the deficit by $237 billion — not $273 billion, as the previous president claimed. Furthermore, regardless of the precise quantity is, a number of specialists pushed again in opposition to the notion that the financial savings equated to a “reduce” to Medicare, as Trump claimed.
We price Trump’s declare False.
Our Sources
Facilities for Medicare & Medicaid Providers, Fact Sheet: Medicare Drug Price Negotiation Program Revised Guidance, June 2023.
Facilities for Medicare & Medicaid Providers, Medicare Drug Price Negotiation.
Program: Selected Drugs for Initial Price Applicability Year 2026, August 2023.
The Wall Road Journal, “This Is How President Biden ‘Beat Medicare,’” July 9, 2024.
Congressional Price range Workplace, 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 Price range Workplace, 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.
E mail alternate with Karoline Leavitt, nationwide press secretary for Donald J. Trump for President, July 29, 2024.
KFF Well being Information, “Trump Is Wrong in Claiming Full Credit for Lowering Insulin Prices,” July 18, 2024.
Cellphone interview with Andrew Mulcahy, senior well being economist at Rand Corp., July 26, 2024.
Cellphone interview with Juliette Cubanski, deputy director of this system on Medicare coverage at KFF, July 29, 2024.
United States Senate, Roll Name Vote 117th Congress-2nd Session, Aug. 7, 2022.
