In the theater of American politics, few performances are as masterful as the Democratic Party's current sleight of hand with Medicare costs. As we approach the election, listen closely to the well-rehearsed lines: President Biden, the valiant warrior, battling "Big Pharma" to lower costs for the common man, and Vice President Harris, echoing this heroic narrative on the campaign trail.
It's a captivating story, but one that conveniently obscures an inconvenient truth.
On July 29, the Centers for Medicare & Medicaid Services (CMS) unveiled a startling revelation: Medicare Part D "bid" rates -- essentially, the monthly cost of providing coverage to the average senior -- were poised to leap from $64.28 in 2024 to a staggering $179.45 in 2025. That’s a 180 percent increase in one year. As bid rates surge, seniors' premiums inevitably follow suit. The timing of this revelation, just months before a presidential election, was a political catastrophe.
The culprit? The much-lauded Inflation Reduction Act (IRA), the crown jewel of the Biden-Harris administration.
The law was supposed to cap premium increases at 6 percent. So what happened? The authors of the law designed the cap to only apply to a portion of the premium, not what seniors actually pay for coverage. But the Democratic magicians have a trick up their sleeve: a "demo" program that will make these premium hikes mostly disappear -- at least until after the election.
This magical act of fiscal trickery involves a three-year, $72.5 billion taxpayer-funded bailout program. It's a dazzling display of creative accounting, complete with a $15 add-on payment to insurers for each senior they enroll in a participating plan, a limit on annual premium increases, and reduced risk for insurers.
The result? A temporary illusion of stability, masterfully crafted to last just long enough to secure votes.
But let's peek behind the curtain of this elaborate production. The insurers who run the Medicare Part D plans aren't merely innocent bystanders. These companies will experience fewer losses, as the Biden-Harris administration generously shifts the threshold for loss-sharing far above current levels. In essence, taxpayers, not the insurers, will be left holding the bag for most of this new risk.
It's a win-win for the Biden-Harris administration and Part D plans -- but an absolute loss for the American taxpayer. This trick transforms the Medicare program from a carefully balanced risk-sharing arrangement into a taxpayer-funded safety net for plans.
The IRA, in its zeal to "fight Big Pharma," has inadvertently become a sprawling mechanism for raising taxes and expanding subsidies, turning the well-loved, privately managed Part D benefit into a government run nightmare. It's a classic case of political overreach, expanding bureaucratic involvement in healthcare at the expense of long-term fiscal stability.
This "demo" is nothing more than a three-year, multibillion-dollar band-aid, desperately applied to mask the true costs of the IRA from seniors -- and voters -- until after the ballots are counted.
Because as any seasoned observer knows, in politics as in magic, what vanishes must eventually reappear. The premium spike hasn't been eliminated; it's merely been postponed. Does anyone believe this program will end next year or in three years? Taxpayers will be on the perpetual hook to subsidize premiums far greater than what Congress authorized.
This "demo" program is not just a stopgap measure, though. It's a tacit admission of policy failure. If the IRA was the fix it was promised to be, why the need for this elaborate, costly workaround? Why didn’t Congress transition the law into place to ease rising premiums?
The answer is clear and damning: the IRA, in its current form, is unsustainable without massive, ongoing government bailouts. Congress must work towards a long-term solution to fix the law and rebalance risk across taxpayers, insurers and Medicare beneficiaries.
It remains to be seen whether Democrats' Medicare trick wins them the election. But even if it does, the standing ovation will be short-lived. When the curtain falls and reality sets in, it's the American people who will be left holding the bill.
Joel White is the President of the Council for Affordable Health Coverage, a non-profit advocacy organization that seeks to lower the cost of health care for all Americans.
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