10.03.24

CBO Confirms: Biden-Harris Medicare Cost-Shifting Policy Will Cost Taxpayers Billions

WASHINGTON – The nonpartisan Congressional Budget Office (CBO) issued its fiscal analysis of the Biden-Harris administration’s Medicare Part D Premium Stabilization Demonstration Program. Among other findings, CBO estimates the program – which the Centers for Medicare & Medicaid Services (CMS) launched to artificially lower seniors’ premiums that have surged due to Democrat policymaking – could cost taxpayers more than $21 billion over three years if implemented as planned.

CBO conducted its analysis at the request of Senate Budget Committee Ranking Member Chuck Grassley (R-Iowa) and House Budget Committee Chairman Jodey Arrington (R-Texas), along with Senate Finance Committee Ranking Member Mike Crapo (R-Idaho), House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.) and House Ways and Means Committee Chairman Jason Smith (R-Mo.).

“When Democrats unilaterally enacted major changes to Medicare two years ago, they set seniors up for new expenses and fewer options. This nonpartisan CBO analysis confirms CMS’s cost-shifting plan is a dishonest election year gimmick to cover up those consequences,” Grassley said. “Rather than coming to the table and legitimately addressing its partisan mistakes, the Biden-Harris administration threw taxpayer dollars at the problems it created, putting Americans on the hook for tens of billions more dollars.” 

“As predicted, the Biden-Harris Inflation Reduction Act not only quelled investment for new cures, but caused Medicare prescription drug plan premiums to skyrocket, and Democrats are scrambling to cover it up before the election. In July, the Biden-Harris CMS scrambled to create a new federal program that will send billions of tax dollars to large health insurance companies to cover up a massive flaw in their so-called Inflation Reduction Act,” Arrington said. “Today, CBO confirmed that the administration’s election year Hail Mary will cost taxpayers an astounding $7 billion next year alone, and $21 billion over the planned three-year demo, adding to the more than $2 trillion in Biden-Harris executive spending.”

CBO findings of note:

  • Relative to prior projections, CBO expects an increase in federal Medicare Part D spending by $10-$20 billion in 2025 as a result of Democrats’ Inflation Reduction Act. The demonstration’s temporary subsidies will drive up federal spending by another $5 billion and increase net spending on interest by $2 billion.

  • The demonstration program increased plans’ expected benefit payments, which contributed to a significant 2024-2025 rise in the amount plans bid. Those higher bids hike the premiums that beneficiaries pay, as well as the federal subsidies to Part D plans.

  • The demonstration’s taxpayer-funded payments to Medicare prescription drug plans (PDPs) cover costs Part D enrollees would otherwise have to shoulder.

Background:

Congressional Democrats in the Inflation Reduction Act significantly redesigned the Medicare Part D prescription drug benefit at an estimated cost of nearly $30 billion over 10 years. PDP sponsors then moved to increase their plan bids and base beneficiary premiums, while reducing plan offerings for 2025.

As a reaction, CMS announced its Premium Stabilization Demonstration. This cost-shifting program artificially lowered the cost of seniors’ Part D premiums by sending federal funds to large health insurance companies. It applies a uniform reduction of $15 to the base beneficiary premium, establishing a year-over-year limit of $35 on how much a plan’s total Part D premium can increase. The Wall Street Journal Editorial Board called the demonstration a “Medicare election bribe for seniors.”

-30-