08.27.24

Grassley, Arrington Request CBO Analyze Fiscal Impacts of New Biden-Harris Medicare Cost-Shifting Policy

“The Premium Stabilization Demonstration program will shift financial liability away from large health insurers and onto American taxpayers.”

WASHINGTON – Senate Budget Committee Ranking Member Chuck Grassley (R-Iowa) and House Budget Committee Chairman Jodey Arrington (R-Texas) are calling for a Congressional Budget Office (CBO) analysis of a demonstration program the Biden-Harris administration launched to artificially lower Medicare Part D premium payments using taxpayer dollars. This Premium Stabilization Demonstration Program is a reaction to consequences of Democrats’ Inflation “Reduction” Act (IRA), as the law has allowed insurers to hike seniors’ premiums and reduce plan choices. 

“The Biden-Harris administration’s cost-shifting plan is like putting lipstick on a pig. Americans are paying too much for prescriptions – the IRA exacerbated the problem, and now the executive branch is attempting to patch things up ahead of November,” Grassley said of the bicameral effort. “Rather than shuffling taxpayer money around to blur IRA ramifications and bail out big health insurance companies, Democrats ought to focus on enacting bipartisan legislation Senate committees have already passed to shine light on the pharmaceutical industry.”

The lawmakers are specifically asking CBO Director Phillip Swagel to:

  1. Provide a detailed breakdown of the estimated budgetary effects for the new Premium Stabilization Demonstration for plan year 2025. This should encompass net interest costs for the new demonstration program.
  2. Provide a detailed breakdown of the isolated budgetary effects for each of the demonstration’s stated components. This should include the uniform $15 reduction to the base beneficiary premium, the year-over-year increase limit of $35 on a plan’s total Part D premium, and the changes to risk corridors.
  3. Provide a comprehensive breakdown of the average projected payout to individual [prescription drug plan] sponsors under this demonstration.
  4. Outline how Part D plan bid growth and program outlays in 2024 and 2025 compare to CBO’s original assumptions when scoring the redesign provisions of the IRA in 2022.

Joining Grassley and Arrington are Senate Finance Committee Ranking Member Mike Crapo (R-Idaho), House Energy and Commerce Committee Chairwoman Cathy McMorris Rodgers (R-Wash.) and House Ways and Means Committee Chairman Jason Smith (R-Mo.). 

Read the lawmakers’ full letter to the CBO director HERE. 

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