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Elissa Slotkin’s vote for Inflation Reduction Act was not a vote for a Medicare ‘cut’
If Your Time is short
- The 2022 Inflation Reduction Act allows Medicare to negotiate drug prices and cap out-of-pocket costs, lowering costs for older Americans.
- The law does not cut any benefits for Medicare recipients.
- Critics have said the law’s funding changes to Medicare Part D, which helps cover prescription drug costs, could lead to higher premiums and fewer benefits. The Biden administration has announced funding to offset premium increases for standalone Prescription Drug Plans.
Republican U.S. Senate candidate Mike Rogers recently accused his opponent, Rep. Elissa Slotkin, D-Mich., of voting to cut Medicare benefits.
Slotkin "voted to cut Medicare benefits for seniors just two years ago," Rogers’ campaign wrote in a recent blog post. After we contacted the campaign for comment, the item was deleted.
The blog post linked to a Wall Street Journal opinion column written by two economists who served on the White House Council of Economic Advisers under former President Donald Trump. The column argued that funding changes under the 2022 Inflation Reduction Act to Medicare Part D — which helps cover prescription drug costs — could lead to higher premiums and fewer benefits for older Americans.
The Inflation Reduction Act, a wide-ranging climate and health care bill Democrats passed and President Joe Biden signed into law, made a raft of changes to prescription drug pricing and spending under Medicare. The law is expected to reduce the federal deficit by $237 billion over 10 years, according to the Congressional Budget Office, largely because Medicare will negotiate drug prices, lowering the federal government’s costs.
The negotiated drug prices also will mean lower costs for beneficiaries who take those drugs, and a new $2,000 cap on out-of-pocket spending will lower costs for older Americans who pay the most.
Under the law’s new funding structure, insurers who offer Medicare Part D plans will pay a higher share of drug costs starting in 2025 after a beneficiary crosses the $2,000 annual cap. This could increase premiums for beneficiaries on those plans, according to experts and an analysis from KFF, a health policy research organization.
We asked Rogers’ campaign for evidence to support the claim that Slotkin "voted to cut Medicare benefits." It pointed us to articles, including from KFF, Politico and Fox Business, that said premiums were likely to increase because of the Inflation Reduction Act changes.
But to characterize the Inflation Reduction Act as a "cut" to Medicare is misleading, and it ignores the many new benefits beneficiaries will receive because of the law.
Medicare Part D, which offers insurance coverage for prescriptions, is a voluntary program, and about 50 million of the 65 million people Medicare covers are enrolled — either through a standalone Prescription Drug Plan or through Medicare Advantage. Private insurers contract with the federal government to offer prescription drug plans, which beneficiaries can choose from.
The Inflation Reduction Act allowed Medicare, for the first time, to negotiate the price of common drugs and required all plans to cover those drugs at the same rate. The Department of Health and Human Services announced in August new negotiated prices for 10 common drugs; more prices will be negotiated in the years to come. The law also capped out-of-pocket insulin costs for Medicare enrollees at $35 a month.
Starting in 2025, after prescription costs cross the new $2,000 out-of-pocket threshold, the plan pays the majority of the remaining cost, while Medicare and the drugmaker also share some of the cost.
This change means health plans will pay significantly more of the share over that threshold than they paid before the law was signed. Some critics have argued that to cover that new expense, insurers will need to increase premium costs for Medicare Part D enrollees.
Concerns about rising premium costs have merit, said William Hoagland, a senior vice president at the Bipartisan Policy Center who studies health policy.
The federal Centers for Medicare and Medicaid Services said in July that the average monthly bid amount — the amount the plans expect to spend per person, not the cost to the beneficiary — for 2025 Part D plans will be $179.45, a 180% increase from 2024. The actual premium costs for beneficiaries will be announced in September, according to KFF.
But the Centers for Medicare and Medicaid Services has also instituted policies intended to keep premiums from rising dramatically for standalone Prescription Drug Plans. The agency announced a premium stabilization plan that will limit premium increases for participating plans to $35 from 2024 to 2025. The plan will also alter the "risk corridor" for Part D plans, meaning Medicare will assume more of the risk if plans lose money.
The Inflation Reduction Act also caps the annual increase in the base beneficiary premium at 6%. This is a standard the Centers for Medicare and Medicaid Services sets that affects the total premium cost. But there is no limit to how much the total premium for a Part D plan can increase if it is not participating in the stabilization program.
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Republicans have criticized the stabilization plan as an attempt to soften the shock of potential rising premium costs ahead of the 2024 election.
Hoagland said if the standalone Prescription Drug Plan enrollees’ premiums become too expensive, some people will likely move to Medicare Advantage, a more wide-ranging program that often includes drug benefits at a lower premium. Medicare-approved private companies run Medicare Advantage.
"I don’t think it entirely eliminates the availability of them receiving benefits and Medicare, it just means there’s going to be some churn on what programs they participate in or not," he said.
The opinion column that Rogers’ campaign cited also argued that some insurers may decide it is not profitable to operate in the traditional Prescription Drug Plan market and leave the program.
Mutual of Omaha said in March that it will exit the Medicare Prescription Drug Plan market at year’s end because of the "pending impact of the Inflation Reduction Act" on Medicare drug plans.
On average, beneficiaries had fewer plan options for standalone drug plans in 2024 than any other year since the plan’s inception.
But Mariana Socal, an associate professor at Johns Hopkins University who researches Medicare and drug pricing policy, said fewer options does not necessarily mean worse benefits. Most beneficiaries, according to her research, would prefer lower drug costs to having a greater number of plans to choose from.
Rogers’ statement ignores the ways the law significantly expands benefits for Medicare enrollees by lowering drug costs and capping out-of-pocket spending.
The new negotiated drug prices will result in significantly lower costs for Medicare enrollees who take the medications selected for negotiation this year, Socal said. According to the Centers for Medicare and Medicaid Services, about 8.8 million people enrolled in Medicare take at least one of the 10 drugs selected this year for negotiation, and those 10 drugs account for 20% of the total gross prescription cost under Medicare Part D.
"There is a huge difference between paying $200 at the pharmacy counter versus $50 or $40 at the pharmacy counter every month," Socal said. "So, I think there will still be a benefit even for those populations who don't necessarily expect or anticipate that they will cross the cap in that year."
The law also requires that Medicare Part D plans cover each of the negotiated drugs. That means beneficiaries who take more than one of the drugs will not need to research Part D plans to find one that covers all of the drugs they need.
The out-of-pocket spending cap will also result in savings for the beneficiaries who have the highest drug prices. Under the previous rules, beneficiaries paid 5% of their drug costs over $7,500 throughout the whole year.
According to KFF, 1.5 million people enrolled in Medicare Part D plans exceeded $2,000 a month in 2021, and nearly 5 million people have exceeded that threshold once in the last 10 years.
"These are very very sick individuals, and they often would forgo treatments that are important," Socal said.
Rogers said Slotkin’s vote for the 2022 Inflation Reduction Act was a vote to "cut Medicare benefits for seniors."
That mischaracterizes the effect of the law, which did not cut any benefits.
The law lowered the cost of some of the most commonly prescribed, and most expensive, drugs for Medicare enrollees and capped out-of-pocket insulin costs at $35 a month. It also capped out-of-pocket costs for beneficiaries at $2,000 a year.
Some critics have expressed concern that the law could increase premiums for beneficiaries and reduce options for prescription drug plans. Premium increases do not equal "cuts," and were not part of the law that Slotkin voted for. Experts noted that if Medicare Part D premiums increase, enrollees can switch to other plans, such as Medicare Advantage.
We rate this claim False.
Our Sources
Phone Interview with Mariana Socal, associate professor of health policy and management at Johns Hopkins University
Phone interview with G. William Hoagland, senior vice president at Bipartisan Policy Center
Email interview with Chris Gustafson, spokesperson for Mike Rogers campaign, Aug. 26, 2024
Mike Rogers, Great Lakes Guide – Shady Slotkin's Week of Lies, Aug. 16, 2024
The Wall Street Journal, The Inflation Reduction Act Comes for Medicare, Nov. 21, 2022
Congressional Budget Office, Estimated Budgetary Effects of Public Law 117-169, Sept. 7, 2022
KFF, What to Know About Medicare Part D Premiums, Aug. 1, 2024
KFF, An Overview of the Medicare Part D Prescription Drug Benefit, Oct. 17, 2024
KFF, Explaining the Prescription Drug Provisions in the Inflation Reduction Act, Jan. 24, 2023
KFF, Medicare Part D in 2024: A First Look at Prescription Drug Plan Availability, Premiums, and Cost Sharing, Nov. 8, 2023
House Energy and Commerce Committee Chair Cathy McMorris Rodgers, The Biden-Harris Price-Setting Scheme Raises Costs on Seniors, Aug. 15, 2024
Centers for Medicaid and Medicare Services, CMS Releases 2025 Medicare Part D Bid Information and Announces Premium Stabilization Demonstration, July 29, 2024
Centers for Medicaid and Medicare Services, Medicare Drug Price Negotiation Program: Negotiated Prices for Initial Price Applicability Year 2026, Aug. 15, 2024
KFF, Millions of People with Medicare Will Benefit from the New Out-of-Pocket Drug Spending Cap Over Time, Feb. 8, 2024
PMS Brokerage, Mutual of Omaha Rx Exits PDP Market, March 21, 2024
Mariana P Socal and Gerard F Anderson, Older Americans' Preferences Between Lower Drug Prices and Prescription Drug Plan Choice, Jan. 16, 2020
Politico, Biden admin to spend billions to blunt spike in Medicare drug premiums, Aug. 13, 2024
Fox Business, Democrats haunted by past support for signature Biden law as seniors face ‘dramatic rise’ in Medicare costs, Dec. 19, 2023
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Elissa Slotkin’s vote for Inflation Reduction Act was not a vote for a Medicare ‘cut’
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