“Vice President Kamala Harris solid the tie-breaking vote to chop, as , Medicare by $273 billion. She solid a vote to chop Medicare.”
— Former President Donald Trump at a July 24 marketing campaign rally in Charlotte, North Carolina.
Throughout a July 24 marketing campaign rally in Charlotte, North Carolina, former President Donald Trump claimed that Vice President Kamala Harris was accountable for passing laws within the U.S. Senate to chop Medicare spending by practically $300 billion.
“As Vice President, Kamala Harris solid the tie-breaking vote to chop, as , Medicare by $273 billion,” Trump informed rally attendees. “She solid 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 Road 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 solid the tie-breaking vote — would hurt Medicare sufferers by driving up prices. His article cited a Congressional Finances Workplace evaluation displaying 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 packages wouldn’t quantity to the form of “lower” to Medicare advantages Trump implied, consultants informed KFF Well being Information. A number of provisions within the legislation pertaining to prescription drug pricing are extensively seen by well being coverage consultants 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 cut back Medicare spending with none influence to companies provided.
We dug into the details surrounding Trump’s declare and the legislation’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 routinely 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 People and others receiving Medicare insurance coverage protection.
The legislation caps the price 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 quicker than the inflation fee. The legislation additionally authorizes Medicare officers, for the primary time, to barter drug pricing straight 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 presently being negotiated for these medicine,” mentioned Juliette Cubanski, deputy director of this system on Medicare coverage at KFF, a well being info nonprofit that features KFF Well being Information.
In line with an evaluation by the Congressional Finances Workplace, the nonpartisan federal company that calculates the monetary influence of latest laws, the Inflation Discount 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 probably price 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 mentioned the legislation would “lower Medicare” by $273 billion; he probably meant $237 billion.
Regardless of the federal government being anticipated to spend much less total, beneficiaries’ companies wouldn’t essentially be lower, as Trump claimed. The truth is, most Medicare recipients would probably see their prices lower, too, whereas preserving the identical degree of advantages.
“There are massive shifts in who’s paying for what,” mentioned 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 medicine.”
Cubanski, echoing Mulcahy, mentioned: “While you’re decreasing Medicare spending, that’s not the identical factor as a lower to Medicare or chopping Medicare advantages. Should 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 yr in the past, the Facilities for Medicare & Medicaid Companies named the first 10 medicine on which it’s going to focus, although the precise financial savings from the drug pricing negotiations course of will probably be recognized solely when the federal government and drug producers attain agreements. The brand new pricing for this primary batch of medicines is ready 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 believe for lots of the medicine chosen within the first yr, my expectation is that the federal government received’t be capable of do significantly better than the PBMs,” Mulcahy informed KFF Well being Information.
The Medicare drug pricing program may have unfavourable unwanted effects. Philipson, for instance, argued in his op-ed that the negotiations will “deter firms from creating new medicines” and threaten older People’ entry to medical doctors, as producers and hospitals would probably be reimbursed much less for his or her medicine and companies.
Cubanski disregarded such issues.
“The drug business definitely has a vested curiosity, , in elevating alarm bells,” she mentioned. “I believe 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 legislation consists of a number of provisions that will probably be very useful for Medicare beneficiaries.”
On Aug. 15, CMS introduced the outcomes of its negotiation over the primary spherical of medicine. The brand new costs symbolize reductions starting from 38% to 79% of the unique prices. White Home officers mentioned 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 onerous numbers and his interpretation of what they imply.
The evaluation Trump cited, per his marketing campaign, mentioned 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 consultants pushed again in opposition to the notion that the financial savings equated to a “lower” to Medicare, as Trump claimed.
We fee Trump’s declare False.
Our Sources
Facilities for Medicare & Medicaid Companies, Truth Sheet: Medicare Drug Value Negotiation Program Revised Steering, June 2023.
Facilities for Medicare & Medicaid Companies, Medicare Drug Value Negotiation.
Program: Chosen Medicine for Preliminary Value Applicability 12 months 2026, August 2023.
The Wall Road Journal, “This Is How President Biden ‘Beat Medicare,’” July 9, 2024.
Congressional Finances Workplace, Estimated Budgetary Results of Public Regulation 117-169, to Present for Reconciliation Pursuant to Title II of S. Con. Res. 14, Sept. 7, 2022.
Congressional Finances Workplace, How CBO Estimated the Budgetary Affect 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.
Electronic mail change with Karoline Leavitt, nationwide press secretary for Donald J. Trump for President, July 29, 2024.
KFF Well being Information, “Trump Is Unsuitable in Claiming Full Credit score for Reducing Insulin Costs,” 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.