Elissa Slotkin's vote for the Inflation Control Act was not a vote for Medicare “cuts”

Republican U.S. Senate candidate Mike Rogers recently accused his opponent, Democrat Elissa Slotkin of Michigan, of voting for cuts to Medicare benefits.

Slotkin “voted to cut Medicare benefits for seniors just two years ago,” Rogers' campaign wrote in a recent blog post. After we reached out to the campaign for comment, the post was deleted.

The blog post linked to a Wall Street Journal opinion piece written by two economists who served on the White House Economic Advisory Council under former President Donald Trump. The article argued that funding changes under the Inflation Reduction Act of 2022 for Medicare Part D — which helps cover prescription drug costs — could lead to higher premiums and fewer benefits for older Americans.

The Inflation Reduction Act, a sweeping climate and health care bill passed by Democrats and signed by President Joe Biden, introduced a series of changes to prescription drug prices and Medicare spending. The law is expected to reduce the federal deficit by $237 billion over the next decade, according to the Congressional Budget Office, largely because Medicare will negotiate drug prices, reducing the federal government's costs.

Negotiated drug prices also mean lower costs for recipients of those drugs, and a new $2,000 cap on out-of-pocket costs will lower costs for older Americans, who pay the most.

Under the law's new financing structure, insurers offering Medicare Part D plans will begin paying a higher share of drug costs in 2025 if a beneficiary exceeds the $2,000 annual cap. This could increase premiums for beneficiaries of those plans, according to experts and an analysis by the health policy research organization KFF.

We asked Rogers' campaign for evidence to support the claim that Slotkin “voted to cut Medicare benefits.” They pointed us to articles, including from KFF, Politico, and Fox Business, that said premiums would likely rise due to changes to the Inflation Reduction Act.

But portraying the Inflation Reduction Act as a “cut” in Medicare benefits is misleading and ignores the many new benefits the law provides recipients.

What has changed in Medicare under the Inflation Reduction Act?

Medicare Part D, which provides coverage for drugs, is a voluntary program, and about 50 million of the 65 million people covered by Medicare are enrolled in either a stand-alone drug plan or Medicare Advantage. Private insurers contract with the federal government to offer drug plans from which enrollees can choose.

The Inflation Reduction Act allowed Medicare to negotiate prices for common drugs for the first time and required all health plans to cover those drugs at the same rate. The Department of Health and Human Services announced new rates for 10 common drugs in August, with more rates to be negotiated in the coming years. The law also capped the insulin copayment for Medicare beneficiaries at $35 per month.

Starting in 2025, when prescription drug costs exceed the new $2,000 limit, the plan will cover most of the remaining costs, while Medicare and the drug manufacturer will also share some of the cost.

This change means that health insurers will cover a significantly higher share of the amount above this threshold than before the law was passed. Some critics argue that to cover these new costs, insurers will have to raise premiums for Medicare Part D enrollees.

Will the Inflation Reduction Act increase Medicare Part D premiums?

Concerns about rising premium costs are justified, says William Hoagland, senior vice president of the Bipartisan Policy Center, which focuses on health policy.

The U.S. Centers for Medicare and Medicaid Services announced in July that the average monthly bid amount — the amount plans will spend per person, not the cost to the beneficiary — for Part D plans will be $179.45 in 2025, a 180% increase from 2024. The actual premium cost to beneficiaries will be announced in September, according to KFF.

But the Centers for Medicare and Medicaid Services has also taken steps to prevent premiums for stand-alone drug plans from rising dramatically. The agency announced a premium stabilization plan that will cap premium increases for participating plans at $35 from 2024 to 2025. The plan will also change the “risk corridor” for Part D plans, meaning Medicare will assume more of the risk when plans lose money.

The Inflation Reduction Act also caps annual base premium increases at 6%. This is a standard set by the Centers for Medicare and Medicaid Services that affects total premium costs. However, there is no limit to how much the total premium can increase for a Part D plan if it does not participate in the stabilization program.

Republicans criticized the stabilization plan as an attempt to soften the shock of potentially rising premium costs before the 2024 election.

Hoagland said if premiums became too expensive for those covered by the stand-alone drug plan, some would likely switch to Medicare Advantage, a more comprehensive program that often includes drug benefits at lower premiums. Medicare Advantage is operated by private companies approved by Medicare.

“I don't think it completely blocks their access to Social Security and Medicare, it just means there will be some fluctuation in terms of the programs they participate in and the programs they don't participate in,” he said.

The opinion column cited by Rogers' campaign also argued that some insurers might conclude that it was not profitable to operate in the traditional prescription drug market and might leave the program.

Mutual of Omaha announced in March that it would withdraw from the Medicare prescription drug market at the end of the year because the “impact of the Inflation Reduction Act” on Medicare drug plans is not yet over.

On average, beneficiaries had fewer plan options for stand-alone drug plans in 2024 than in any other year since the plan's inception.

But Mariana Socal, an associate professor at Johns Hopkins University who studies Medicare and drug pricing policy, said fewer options does not necessarily mean worse benefits. Her research shows that most beneficiaries would prefer lower drug costs to more choice of plans.

Inflation Reduction Act lowers drug prices for Medicare insured

Rogers' statement ignores that the law significantly expands benefits for Medicare beneficiaries by reducing drug costs and limiting out-of-pocket costs.

The new negotiated drug prices will result in significantly lower costs for Medicare enrollees who take the drugs selected for negotiation this year, Socal said. According to the Centers for Medicare and Medicaid Services, about 8.8 million Medicare enrollees take at least one of the 10 drugs selected for negotiation this year, and those 10 drugs account for 20% of total gross prescription costs under Medicare Part D.

“There's a huge difference between paying $200 at the pharmacy every month or paying $50 or $40,” Socal said. “So I think there will be a benefit even for those populations that don't necessarily expect or anticipate that they'll exceed the cap this year.”

The law also requires Medicare Part D plans to cover all of the drugs covered. This means that beneficiaries who take more than one of the drugs do not have to search for Part D plans to find one that covers all of the drugs they need.

The out-of-pocket cap will also result in savings for beneficiaries who pay the highest drug prices. Under previous rules, beneficiaries paid 5% of their drug costs over $7,500 for the entire year.

According to KFF, in 2021, 1.5 million people enrolled in Medicare Part D plans spent more than $2,000 per month, and over the past 10 years, nearly 5 million people have exceeded that threshold at some point.

“These are very, very sick people and they often forgo important treatments,” Socal said.

Our verdict

Rogers said Slotkin's vote for the Inflation Reduction Act of 2022 was a vote for “cutting Medicare benefits for seniors.”

This misrepresents the effect of the law, which did not result in any benefit cuts.

The law reduced the cost of some of the most commonly prescribed and expensive drugs for Medicare beneficiaries and capped the out-of-pocket cost for insulin at $35 a month. It also capped out-of-pocket costs for beneficiaries at $2,000 a year.

Some critics have expressed concern that the law could raise premiums for those insured and limit drug plan choices. Premium increases are not the same as “cuts” and were not part of the law Slotkin voted for. Experts pointed out that if Medicare Part D premiums are increased, insureds can switch to other plans, such as Medicare Advantage.

We believe this claim to be false.