Bicameral Leaders Request Budgetary Analysis of New Biden Harris Medicare Cost Shifting Policy

Bicameral Leaders Request Budgetary Analysis of New Biden-Harris Medicare Cost-Shifting Policy

Washington, D.C.--U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho), U.S. Senate Budget Committee Ranking Member Chuck Grassley (R-Iowa), U.S. House Budget Committee Chair Jodey Arrington (R-Texas), U.S. House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Washington) and U.S. House Ways and Means Committee Chair Jason Smith (R-Missouri) sent a letter to Congressional Budget Office (CBO) Director Phillip Swagel requesting an analysis of the Medicare Part D Premium Stabilization Demonstration program, which intends to use taxpayer funds to mitigate adverse consequences from the Inflation Reduction Act (IRA).

In response to the Biden-Harris Administration's plan to spend billions in taxpayer dollars to artificially lower the cost of seniors' Part D premiums, the members requested an analysis on the budgetary impact of this new demonstration program. The members request that CBO:

1. Provide a detailed breakdown of the estimated budgetary effects for the new Premium Stabilization Demonstration for plan year 2025. This should encompass net interest costs for the new demonstration program.
2. Provide a detailed breakdown of the isolated budgetary effects for each of the demonstration's stated components. This should include the uniform $15 reduction to the base beneficiary premium, the year-over-year increase limit of $35 on a plan's total Part D premium and the changes to risk corridors.
3. Provide a comprehensive breakdown of the average projected payout to individual prescription drug plan (PDP) sponsors under this demonstration.
4. Outline how Part D plan bid growth and program outlays in 2024 and 2025 compare to CBO's original assumptions when scoring the redesign provisions of the IRA in 2022.

Background:

Congressional Democrats included policies in the IRA that significantly alter the Medicare Part D prescription drug benefit at an estimated cost of nearly $30 billion over ten years.

These significant changes to the Medicare Part D prescription drug benefit take effect in 2025. As a result, Medicare PDP sponsors are increasing seniors' Part D premiums and reducing plan choices.

In an effort to dull the repercussions of their rushed, partisan policymaking, on Monday, July 29th, the Administration announced a new Medicare Part D Premium Stabilization Demonstration program. The demo will shift financial liability away from health insurers onto American taxpayers by applying a uniform reduction of $15 to the base beneficiary premium, establishing a year-over-year limit of $35 on how much a plan's total Part D premium can increase and adjusting risk corridors to shift financial liability from those insurers to taxpayers.

Earlier this month, Crapo, Smith and McMorris Rodgers called on the Government Accountability Office to review the demonstration.