Jacob Gardenswartz | (TNS) KFF Health News
“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 campaign rally in Charlotte, North Carolina.
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During a July 24 campaign rally in Charlotte, North Carolina, former President Donald Trump claimed that Vice President Kamala Harris was responsible for passing legislation in the U.S. Senate to cut Medicare spending by nearly $300 billion.
“As vice president, Kamala Harris cast the tie-breaking vote to cut, as you know, Medicare by $273 billion,” Trump told rally attendees. “She cast a vote to cut Medicare.”
Trump gave no further explanation for which vote he was referring to or how he arrived at that figure. A campaign spokesperson told KFF Health News in an email 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 climate and health care measure passed in 2022 for which Harris cast the tie-breaking vote — would harm Medicare patients by driving up costs. His article cited a Congressional Budget Office analysis showing that the measure’s health care provisions would reduce 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 government’s spending less on Medicare programs would not amount to the kind of “cut” to Medicare benefits Trump implied, experts told KFF Health News. Several provisions in the law pertaining to prescription drug pricing are widely seen by health policy experts as beneficial to both consumers and the government. Individual patients are expected to spend less out-of-pocket on their prescription drugs, while the government will reduce Medicare spending without any impact to services offered.
We dug into the facts surrounding Trump’s claim and the law’s effect on Medicare. It resurfaces a long-running debate over Medicare savings versus cuts and the question of whether lowered spending automatically leads to a reduction in benefits for Medicare enrollees.
Following the Numbers
The Inflation Reduction Act’s many provisions include some intended to lower prescription drug costs for older Americans and others receiving Medicare insurance coverage.
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The law caps the cost of insulin at $35 per month for most Medicare beneficiaries, establishes out-of-pocket spending limits for Part D drug coverage, and institutes penalties for drug companies that raise prices faster than the inflation rate. The law also authorizes Medicare officials, for the first time, to negotiate drug pricing directly with pharmaceutical manufacturers.
“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,” said Juliette Cubanski, deputy director of the program on Medicare policy at KFF, a health information nonprofit that includes KFF Health News.
According to an analysis by the Congressional Budget Office, the nonpartisan federal agency that calculates the financial impact of new legislation, the Inflation Reduction Act’s health care measures will have a mixed effect on spending. Some steps, such as the cap on beneficiaries’ out-of-pocket prescription drug spending, will likely cost the government more. But others, including the drug price negotiations, are projected to save the government money. All told, the Inflation Reduction Act’s health care measures are expected to save taxpayers $237 billion over 10 years.
On the numbers, Trump said the law would “cut Medicare” by $273 billion; he likely meant $237 billion.
Despite the government being expected to spend less overall, beneficiaries’ services would not necessarily be cut, as Trump claimed. In fact, most Medicare recipients would likely see their costs decrease, too, while keeping the same level of benefits.
“There are big shifts in who’s paying for what,” said Andrew Mulcahy, a senior health economist who researches prescription drug markets at the Rand Corp., a nonpartisan think tank. “But that doesn’t mean they’re getting any less. If anything, they’ll have better access to drugs.”
Cubanski, echoing Mulcahy, said: “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 year ago, the Centers for Medicare & Medicaid Services named the first 10 drugs on which it will focus, though the exact savings from the drug pricing negotiations process will be known only when the government and drug manufacturers reach agreements. The new pricing for this first batch of medications is set to take effect in 2026.
Whether the government can negotiate meaningfully lower costs versus current prices is unclear, especially since pharmacy benefit managers, or PBMs — middlemen in the negotiations among drug companies, 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 told KFF Health News.
The Medicare drug pricing program could have negative side effects. Philipson, for example, argued in his op-ed that the negotiations will “deter companies from developing new medicines” and threaten older Americans’ access to doctors, as manufacturers and hospitals would likely be reimbursed less for their drugs and services.
Cubanski brushed off such concerns.
“The drug industry certainly has a vested interest, you know, in raising alarm bells,” she said. “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 announced the results of its negotiation over the first round of drugs. The new prices represent discounts ranging from 38% to 79% of the original costs. White House officials said the negotiations will lead to $6 billion in savings for Medicare the first year, while Medicare recipients are expected to save an additional $1.5 billion in out-of-pocket costs.
Our Ruling
Trump’s statement is wrong both on the hard numbers and his interpretation of what they mean.
The analysis Trump cited, per his campaign, said the Inflation Reduction Act’s health care provisions would lower the deficit by $237 billion — not $273 billion, as the former president claimed. Moreover, whatever the exact number is, multiple experts pushed back against the notion that the savings equated to a “cut” to Medicare, as Trump claimed.
We rate Trump’s claim False.
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(KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs of KFF — the independent source for health policy research, polling and journalism.)
©2024 KFF Health News. Distributed by Tribune Content Agency, LLC.
