A plan from the Biden-Harris administration to lower insurance premium prices for seniors could cost more than $7 billion next year and $21 billion through 2027, according to a new report from the Congressional Budget Office .
Republican lawmakers say the program to subsidize Medicare Part D prescription drug plans, announced this summer by the Centers for Medicare & Medicaid Services, is an attempt by Democrats to hide the rising costs of healthcare during the 2024 election.
Senate Budget Committee ranking member Chuck Grassley (R-IA) called the CMS measure “a dishonest election-year gimmick” to cover up the consequences of changes to Medicare under the 2022 Inflation Reduction Act .
Insurance premiums for Medicare supplemental insurance have increased significantly since the passage of the IRA, which changed key aspects of the Medicare program, such as increasing costs for insurers, including by setting an annual cap for out-of-pocket prescription costs at $2,000 and limiting the amount insurers can raise premiums each year.
Most of these changes are slated to take effect next year, and the CBO identified these policies as the reason Medicare Part D supplemental insurers needed to increase their prices by a national average of 179% in 2025 to provide the same level of coverage as they do now.
“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,” said Grassley.
To mitigate these costs for beneficiaries, CMS plans to slash enrollee premiums by $15 per month with temporary subsidies through 2027, which the CBO estimates will cost taxpayers $2.9 billion this year alone.
The agency also announced that the increase in monthly Part D premiums from 2024 to 2025 would be capped at $35, and insurers would also receive subsidies for carrying higher loads of risk. Together, these measures will cost an additional $2.1 billion.
This approximate $5 billion in spending for 2025 will add $2 billion to net spending for interest, according to the CBO.
The CBO report does not give an estimate for the subsidies extending into 2026 and 2027 since CMS has only specified what they will look like next year.
However, Republicans estimate that the minimum cost will be $21 billion, extrapolating the 2025 cost over the full three years of CMS's stated goal.
Election year politics
Energy and Commerce Subcommittee on Health Chairman Brett Guthrie (R-KY) told the Washington Examiner that the CBO report confirmed the CMS subsidies are “robbing Peter to pay Paul ahead of the election in an effort to win votes.”
“The Biden-Harris Medicare Part D gimmick will balloon federal spending with no real long-term plan to bring down premiums following the end of their three-year demo period,” said Guthrie.
House Budget Committee Chairman Jodey Arrington (R-TX) called the CMS subsidies an “election year Hail Mary” that sends “billions of tax dollars to large health insurance companies to cover up a massive flaw in their so-called Inflation Reduction Act.”
“This type of executive overreach treats the Treasury as a piggy bank, exacerbating inflation and sidestepping Congress to advance conveniently timed political aims,” said Senate Finance Committee ranking member Mike Crapo.
Neither the White House nor CMS responded to the Washington Examiner’s request for comment.
Last month, 48 House Republicans from three different committees contacted CMS Administrator Chiquita Brooks-LaSure directly to inquire about the agency’s subsidy plan.
A spokesperson for Guthrie confirmed for the Washington Examiner that CMS has not responded to their inquiry, but the deadline for a response is Oct. 4.
Healthcare on the ballot
Rising healthcare costs are a prominent matter on the ballot for the 2024 presidential election and downballot races.
Sen. J.D. Vance (R-OH), Republican vice presidential candidate, and Gov. Tim Walz (D-MN), Democratic vice presidential candidate, spent a sizable chunk of their Tuesday debate discussing Obamacare policy, including maintaining insurance coverage for those with preexisting conditions.
Voters largely think their health insurance premiums are too high for what is covered, according to a poll by healthcare think tank KFF in March.
Nearly a third of Medicare beneficiaries, 27%, rate their current monthly premium amounts as “fair” or “poor” for 2024 rates.
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Disapproval ratings are higher for those with Obamacare marketplace coverage, 55%, and employer-sponsored insurance, 46%.
About half of all insured adults, 48%, worry about affording their monthly health insurance premiums.
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