Biden-Harris Bails Out Medicare Part D with Billions of Dollars 100 Days Before the Election

The Biden-Harris administration, fearing spiking Medicare Part D premiums, is using billions of dollars to bail out health insurers and placate seniors 100 days before presidential the election.

The Paragon Health Institute released a report noting that the Centers for Medicare and Medicaid Services (CMS) added a three-year “premium stabilization” demonstration for stand-alone prescription drug plans in Medicare Part D. The institute’s Jackson Hammond contended that the move represents a massive bailout after the Biden-Harris’s Inflation Reduction Act move to cap out-of-pocket costs for the Part D program.

Essentially, the IRA set a $2,000 per year cap for the Part D program, which “significantly” increases insurers’ financial liabilities:

What do insurers do when the costs of their plans go up? They raise premiums, of course. We don’t know yet what premiums will be in Part D but, we do know they will jump because the average bid submitted by plans for stand-alone PDPs has skyrocketed from $64.28 in 2024 to $179.45 in 2025 – and roughly 25 percent of the increase will be borne by beneficiaries and 75 percent borne by taxpayers.

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This could have been avoided with a higher out-of-pocket cap. The original bipartisan Part D redesign had a cost cap of $3,100, which would have limited both premium increases and taxpayers’ liability. It’s worth noting that former CBO director Doug Holtz-Eakin estimates that less than three percent of Medicare beneficiaries were facing out-of-pocket costs greater than $2,000. So instead under the partisan IRA, Part D premiums have been driven much higher.

“CMS has yet to release any cost estimates, but some back-of-the-envelope math puts the cost over three years well in excess of $10 billion for a demonstration,” Hammond wrote.

The Wall Street Journal editorial board wrote this week:

This was a back-door way for Democrats to ration access to costly drugs while shifting the political blame for doing so to insurers.

The gambit backfired as insurers are raising premiums. CMS’s intervention is another example of how the IRA will cost far more than Democrats claimed. Nobody knows how much more since CMS isn’t doing a normal rule-making that requires a cost analysis.

Joe Grogan, who served as a domestic policy adviser to Trump, wrote an op-ed for RealClearPolicy about how the Biden-Harris administration is trying to bail out its failed health policies right before the pivotal election season:

Announcing huge premium increases for seniors going into the Democratic Convention would have spoiled the party. The Premium Stabilization Demonstration means that bids will need to be recalculated, delaying publication of premiums until mid-September, when they will be more reasonable due to the demonstration’s taxpayer subsidy. As a political bonus, the delay in the premium announcement gives the Administration a week and a half to tout “savings” from the IRA’s drug price setting component, scheduled to be announced September 1^st.

Grogan added, “After the election, policymakers will be left with unpalatable choices: if the demonstration expires, Part D will become too expensive for enough seniors to buy coverage and the program will die.  Or taxpayers can be asked to stomach more spending. Either way, Part D’s success is destroyed.”