Dems Spin Medicare Spending Spree Into Story About GOP ‘Cuts’

I recently explained how Democrat attacks on the Trump administration for ending a bailout of Medicare Part D insurers have no merit. But the political and policy problems go far deeper than that.

In late July, the Congressional Budget Office (CBO) released an analysis outlining how the agency got its estimates horribly wrong when predicting the cost of the drug pricing changes Democrats passed in the Inflation (Reduction) Act. The report is part and parcel of a trend among the left: inflate spending on government programs beyond all measure without anyone noticing and then attack Republicans for “cuts” when they attempt to scale back these stealth spending increases.

Medicare Mess-Up

The opening paragraphs of the CBO report introduce what amounts to an 18-page mea culpa by the budget office:

In September 2022, following the [IRA’s] enactment in August, CBO projected that enacting those [drug pricing] provisions would lead to combined deficit reductions of $129 billion over the 2022–2031 period. …

Since then, on the basis of new information, CBO has revised its projections. Evidence now indicates that the spending reductions attributable to drug price negotiation and inflation rebates have been smaller than CBO originally estimated. The costs of the Part D redesign have been significantly larger because of greater-than-anticipated increases in spending because of greater use of prescription drugs. As a result, the agency now projects that those provisions will combine to increase deficits over the 2022–2031 period.

The rest of the report details the various ways the original estimates missed the mark. Drug price “negotiation” failed to deliver an estimated 50 percent reduction in net prices; inflation rebates didn’t materialize because inflation has remained persistently high (instead of receiving a projected $2.3 billion in Part B rebates in 2023 and 2024, the federal government received only $136 million, or about 6 percent of the original projection); plans “anticipated a 35 percent increase in annual costs per enrollee” this year, compared to CBO’s estimate of only a 5 percent rise.

Higher Spending Estimates

The July CBO report is consistent with recent estimates from the budget office. Last November, CBO stated that the so-called Inflation Reduction Act (IRA) could raise Part D spending by as much as $500 billion over a decade. In February, it raised its estimates of Part D spending in the coming decade by $700 billion, $550 billion of which largely came from the IRA redesign.

The explosion in spending also comports with analyses from the Medicare Payment Advisory Commission (MedPAC) and the Medicare actuary’s office. As I noted in June, this year’s Medicare trustees report, compiled by staff from the Medicare actuary, raised the long-term (i.e., 75-year) cost of the Part D program by $5 trillion, or roughly one-third, compared to last year’s report, due in large part to the effects of the IRA changes.

Set aside for a moment the question of why CBO and other budget gnomes got their estimates so wrong at the time of the IRA’s passage. Regardless of the reasons or intent, the changes amount to trillions of dollars in long-term spending that lawmakers didn’t know about when the IRA passed.

This dynamic raises two obvious questions: Has the press reported on this explosion in unanticipated spending? And if Republicans propose repealing the IRA’s drug pricing provisions, on the grounds that Congress didn’t know the bill would cost so much when lawmakers voted for it, do you think they would get attacked for wanting to “cut” Medicare? I think we all know the answers to both questions.

Explosion of Medicaid Spending

The same explosion in spending happened during the Biden years regarding Medicaid. Except in the latter case, the spending explosion occurred almost entirely due to unilateral regulatory actions by the Biden administration, rather than legislative actions passed by Congress.

Between June 2024 and January 2025, CBO increased its projections for Medicaid spending over the coming decade by $817 billion. As I outlined at the time, most of that growth in projected spending came from administrative actions taken by the Biden administration: expansions of Medicaid eligibility; a rule that limited states’ ability to enforce program integrity measures; another rule that allowed states to increase provider reimbursements; and higher spending on GLP-1 drugs, which the Biden administration wanted to require states to cover.

Again, no one voted for this spending increase, and the press sure as heck didn’t cover it. Just like the press didn’t cover the fact that CBO increased baseline spending for Medicaid by another $700 billion this past February, as I pointed out at the time. Even after taking into consideration the policy changes in last year’s budget reconciliation bill, CBO’s projections for Medicaid spending in the coming decade (specifically, fiscal years 2026-2034) are over $250 billion higher than in June 2024, the final year of the Biden presidency.

Yet all anyone can talk about are the supposed “Republican ‘cuts’” to Medicaid. As with the explosion in Part D spending due to Democrats’ Inflation (Reduction) Act, the political messaging is symptomatic of larger problems: Democrats’ ability to pass spending increases by stealth and the knowing complicity of a corrupt media. Worse yet, it reflects conservatives’ unwillingness to fight back.