“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 marketing campaign rally in Charlotte, North Carolina, former President Donald Trump claimed that Vice President Kamala Harris was answerable for passing laws within the U.S. Senate to chop Medicare spending by almost $300 billion.
“As vice president, Kamala Harris cast the tie-breaking vote to cut, as you know, Medicare by $273 billion,” Trump informed 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 informed 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 solid the tie-breaking vote — would hurt Medicare sufferers by driving up prices. His article cited a Congressional Budget Office evaluation 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 packages wouldn’t quantity to the type of “cut” to Medicare advantages Trump implied, specialists informed KFF Health News. Several provisions within the regulation pertaining to prescription drug pricing are broadly seen by well being coverage specialists as helpful to each shoppers 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 impression to providers supplied.
We dug into the details surrounding Trump’s declare and the regulation’s impact on Medicare. It resurfaces a long-running debate over Medicare financial 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 embrace some supposed to decrease prescription drug prices for older Americans and others receiving Medicare insurance coverage protection.
The regulation caps the price 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 firms that increase costs sooner than the inflation charge. 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,” stated 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 evaluation by the Congressional Budget Office, the nonpartisan federal company that calculates the monetary impression of latest laws, the Inflation Reduction Act’s well being care measures can have a combined impact on spending. Some steps, such because the cap on beneficiaries’ out-of-pocket prescription drug spending, will possible value the federal government extra. But others, together with the drug value negotiations, are projected to avoid wasting the federal government cash. All informed, the Inflation Reduction 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 “cut Medicare” by $273 billion; he possible meant $237 billion.
Despite the federal government being anticipated to spend much less general, beneficiaries’ providers wouldn’t essentially be minimize, as Trump claimed. In truth, most Medicare recipients would possible see their prices lower, too, whereas retaining the identical degree of advantages.
“There are big 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. “But that doesn’t mean they’re getting any less. If anything, they’ll have better access to drugs.”
Cubanski, echoing Mulcahy, stated: “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 medication on which it’ll focus, although the precise financial savings from the drug pricing negotiations course of might be identified 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 firms, 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 informed KFF Health News.
The Medicare drug pricing program might have damaging unwanted 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 possible be reimbursed much less for his or her medication and providers.
Cubanski dismissed such considerations.
“The drug industry certainly has a vested interest, you know, in raising alarm bells,” she stated. “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 introduced the outcomes of its negotiation over the primary spherical of medication. The new costs symbolize reductions starting from 38% to 79% of the unique prices. White House officers stated the negotiations will result in $6 billion in financial savings for Medicare the primary yr, whereas Medicare recipients are anticipated to avoid wasting a further $1.5 billion in out-of-pocket prices.
Our Ruling
Trump’s assertion is mistaken each on the laborious numbers and his interpretation of what they imply.
The evaluation Trump cited, per his marketing campaign, stated 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 precise quantity is, a number of specialists pushed again in opposition to the notion that the financial savings equated to a “cut” to Medicare, as Trump claimed.
We charge 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 within the 2022 Reconciliation Act, February 2023.
C-SPAN, “Former President Trump Campaigns in Charlotte, North Carolina,” July 24, 2024.
Email alternate 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.