“Vice President Kamala Harris forged the tie-breaking vote to chop, as you already know, 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 already know, Medicare by $273 billion,” Trump informed rally attendees. “She forged a vote to chop Medicare.”
Trump gave no additional clarification 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 electronic 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 cut back the federal deficit by $237 billion over 10 years. “(M)ost of that discount comes from this system spending much less on prescribed drugs,” Philipson wrote.
However the authorities’s spending much less on Medicare applications wouldn’t quantity to the form 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 shoppers and the federal government. Particular person sufferers are anticipated to spend much less out-of-pocket on their prescribed drugs, whereas the federal government will scale back Medicare spending with none impression to providers 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 mechanically results in a discount in advantages for Medicare enrollees.
Following the Numbers
The Inflation Discount Act’s many provisions embrace some meant 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 charge. The regulation additionally authorizes Medicare officers, for the primary time, to barter drug pricing instantly with pharmaceutical producers.
“The thought 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 data 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 impression of recent 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 probably price the federal government extra. However others, together with the drug worth negotiations, are projected to save lots of the federal government cash. All informed, the Inflation Discount Act’s well being care measures are anticipated to save lots of taxpayers $237 billion over 10 years.
On the numbers, Trump stated the regulation would “reduce Medicare” by $273 billion; he probably 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. In actual fact, most Medicare recipients would probably 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 suppose 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 chopping Medicare advantages. In case 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 lower cost.”
A yr in the past, the Facilities for Medicare & Medicaid Companies named the first 10 drugs on which it would focus, although the precise financial savings from the drug pricing negotiations course of will likely 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 yr, my expectation is that the federal government received’t be capable to do significantly better than the PBMs,” Mulcahy informed KFF Well being Information.
The Medicare drug pricing program might have unfavourable uncomfortable side 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 medical doctors, as producers and hospitals would probably be reimbursed much less for his or her medication and providers.
Cubanski dismissed such issues.
“The drug business definitely has a vested curiosity, you already know, 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 contains a variety of provisions that will likely be very useful for Medicare beneficiaries.”
On Aug. 15, CMS announced the results of its negotiation over the primary spherical of medicine. 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 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 incorrect 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 towards the notion that the financial savings equated to a “reduce” to Medicare, as Trump claimed.
We charge Trump’s declare False.
Our Sources
Facilities for Medicare & Medicaid Companies, Fact Sheet: Medicare Drug Price Negotiation Program Revised Guidance, June 2023.
Facilities for Medicare & Medicaid Companies, Medicare Drug Price Negotiation.
Program: Selected Drugs for Initial Price Applicability Year 2026, August 2023.
The Wall Avenue Journal, “This Is How President Biden ‘Beat Medicare,’” July 9, 2024.
Congressional Funds 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 Funds 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.
Electronic mail change 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.
Telephone interview with Andrew Mulcahy, senior well being economist at Rand Corp., July 26, 2024.
Telephone 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.
