The Inflation Reduction Act, proposed by Senate Democrats, is expected to save Medicare nearly $300 billion in drug prices without reducing benefits.
On July 27, Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin announced that they had reached an agreement on an economic package called the Inflation Reduction Act of 2022. Manchin went to be one of the last remaining Democrats to pass a budget bill with many of President Joe Biden’s agenda items.
Several readers have since contacted VERIFY to ask if the bill is cutting Medicare funding. Jay asked if Congress is cutting Medicare to fund the Affordable Care Act, while Veronica asked if it’s true that Sen. Raphael Warnock, D-Ga., plans to sign a bill that would “take millions of dollars from Medicare,” a claim he saw on a Georgia TV ad.
Will the Inflation Reduction Act of 2022 Cut Millions of Dollars in Medicare Funding?
No, the Inflation Reduction Act of 2022 will not cut millions of dollars from Medicare funding.
The text of the Inflation Reduction Act of 2022 does not include any funding cuts to Medicare, and in fact sets aside $34 billion in new spending for Medicare.
What the bill actually does is implement rule changes that don’t reduce any benefits, but rather save the federal government money. And because of these savings, Medicare will be a less expensive program.
AARP, a senior advocacy organization, says most of those savings would come from prescription drug price negotiations and rebates that encourage drug companies to keep price increases below the rate of inflation.
Commitment to Seniors, an offshoot of the conservative nonprofit group American Commitment, is running at least four versions of a commercial that claims the Inflation Reduction Act would cut Medicare. That includes the one running in Georgia (viewable here), which claims the legislation cuts nearly $300 billion from Medicare to “facilitate Obamacare, fuel inflation and insurer profits.”
Phil Kerpen, president of American Commitment, stated that seniors “will inevitably lose access to drugs if Medicare is spending $287 billion less on their benefits” in the Engagement with Seniors press release.
Kerpen is referring to a Congressional Budget Office (CBO) analysis of the Inflation Reduction Act that estimates the bill will save the federal government nearly $288 billion in Medicare costs over the next 10 years .
In direct response to the Commitment to Seniors announcements, AARP said the savings “would not be the result of any cuts to the Medicare program.”
Instead, “beneficiaries could get the same drugs as they do now, but those drugs would cost less to them and to Medicare,” the organization said.
The non-profit, non-partisan Committee for a Responsible Federal Budget (CRFB) also refuted the claims made in the commercials, saying the bill would save the federal government nearly $300 billion without cutting benefits. CRFB estimates that the cost-saving measures would also save individuals and businesses $300 billion over the next 10 years through lower premiums and cost-sharing.
“Unfortunately, attacking cost-cutting policies as benefit cuts is a bipartisan tradition,” CRFB said in reference to similar criticisms of potential Medicare savings aimed at the Trump Administration, the Obama Administration and the late Sen. John McCain (R-Az.)
Finally, Senate Democrats estimate that the Inflation Reduction Act will invest $64 billion in Affordable Care Act grant extensions over the next 10 years, an investment far less than the projected savings in drug prices with recipe Senate Democrats estimate the bill will reduce the deficit by $300 billion over the next 10 years.
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