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Biden’s Medicare Cuts Are Coming

We’re all for cutting government spending wherever and whenever possible. But the latest WSJ piece from CTUP senior fellow Casey Mulligan and his University of Chicago colleague Tomas Philipson finds the Biden Medicare cuts are going to make seniors pay more for inferior health care – without reducing the deficit:

President Biden has accused Republicans of scheming to cut Medicare.  In fact, it his signature legislation, the Inflation Reduction Act, that will lead to benefit cuts and premium increases for seniors.  Medicare’s popular drug-coverage program is headed for a painful amputation…

We estimate that beginning in 2025, plan subsidies—specifically, the reinsurance subsidies for the beneficiaries with the most drug spending—will be cut $30 billion, out of revenue that currently totals about $110 billion. With $30 billion less to finance prescription benefits, something will have to give. Plans currently have far too little profit to span the chasm that the Inflation Reduction Act opens between expenses and revenue…

From a political perspective, Democrats couldn’t have scheduled Medicare’s amputation for a worse time. With Congress so evenly divided, a short-term legislative fix may be impossible. By September 2024, the presidential campaign will be in high gear at the same time that beneficiaries begin to consider their 2025 Medicare enrollments. That’s when the Inflation Reduction Act will thoroughly upset tens of millions of elderly voters, all while the authors of the statute ask the country to vote for their presidential nominee. By then, America will have no doubt which party is cutting Medicare.

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