If history’s any indicator, the Inflation Reduction Act (IRA) could haunt Democrats in 2024 like the Affordable Care Act did in the 2010 and 2014 elections.
The most devastating line of those campaigns was: “My opponent voted for Obamacare, which cut $716 billion from Medicare.”
A new economic analysis reveals that the IRA has the same problem.
It too was funded at Medicare’s expense.
Until now this has been obscured by budget gimmicky. Former Congressional Budget Office Director Douglas Holtz-Eakins’ organization, the American Action Forum, uncovers what happened.
In short, the IRA’s Medicare prescription drug reforms save the federal government $266 billion, but the savings are used to fund new climate spending, not reduce seniors’ pharmacy costs.
The analysis concludes that, “the Medicare savings are simply another means of financing the IRA’s $670 billion in clean energy tax credits and other spending on energy and the environment.”
While the law features some inexpensive new benefits, like a $2,000 cap on pharmacy out-of-pocket costs, these consume just a fraction of the savings from the prescription drug policies.
If all the savings had been used to improve Medicare, it would mean $40,000 more for each of the program’s 65 million enrollees. Instead, fewer than 10% of them will see any savings, usually less than $300. Just enough so the law’s backers can say it “reduces drug costs for seniors.”
The big winners from IRA policies like letting Medicare “negotiate” drug prices will be millions of younger, white-collar professionals who’ll get $7,500 credits for electric vehicles (EVs). For each senior who saves a few dollars at the pharmacy counter, six EV buyers will save thousands at the dealership.
This creates several problems next year for candidates who backed the law.
First, cutting Medicare is ballot box poison.
Eight-in-ten Americans – especially the voter-rich age group of 50-64 – fear for the program’s financial future.
Democrats got hammered in 2010 and 2014 for voting to use Medicare funds to pay for Obamacare. In 2012, progressives returned the favor with the infamous “throw granny off a cliff” ad campaign attacking GOP Vice Presidential candidate Paul Ryan’s Medicare proposals.
Second, candidates who backed the IRA have nowhere to hide in 2024.
Senators who voted for it will be on the ballot with President Biden in key battleground states like Pennsylvania, Wisconsin, Nevada, Ohio and Arizona. When the issue is raised in one state, candidates in all the others will have to respond, too.
Third, the law torpedoes the middle-class, “Bidenomics” message.
It’s tough to talk about growing the economy “from the middle out and the bottom up” when transferring wealth from Medicare seniors to EV buyers, who typically earn $150,000 a year. That’s twice the nation’s median household income.
Finally, taking savings from Medicare to fight climate change will make no sense outside the bubbles of climate activism and academia.
Most voters think rising sea levels pose far less of an “existential threat” than policies that put their health care at risk. Even those who are concerned about the environment see health care as a much higher priority. Furthermore, voters are notoriously stingy when asked to make real trade-offs for the cause.
This summer, voters in Sonoma, California – one of our wealthiest, bluest counties — rejected a quarter-cent tax hike to reduce local reliance on fossil fuels.
Imagine how a quarter-trillion-dollar Medicare cut will play next year in Erie and Kenosha.