The Biden Administration war on drug prices is failing; prices are rising, not falling as they would have you believe. I wrote about this in an earlier post in September of this year, called Biden’s War on Drugs.

Just three months later we can already see the disastrous effects of the Biden Inflation Reduction Act (IRA) that was supposed to lower drug prices. The Wall Street Journal editorial board says the Medicare drug rebates are actually raising the cost of medicines.

The Biden White House recently proclaimed that the IRA’s drug rebates are already saving seniors money: “President Biden’s prescription drug law cracks down on price gouging from Big Pharma.” What do they mean?

Under the IRA, drug makers must pay Medicare rebates if they raise list prices more than the rate of inflation. If a company increases the price of an immunotherapy by, say, 8% while inflation is increasing at 3%, it must pay Medicare the 5% difference. Co-insurance payments made by patients are then based on the inflation-adjusted price. Sounds good, so far, right?

Rebates are actually deposited in the Medicare Supplementary Medical Insurance Fund, which is mainly financed by general tax revenue. In other words, politicians, not seniors, are the real beneficiary of the rebates. But the White House doesn’t spin it that way.

Heres’ what the WSJ editors say: “According to the Administration, IRA drug rebates save seniors “as much as $618 per average dose on 47 prescription drugs” (our emphasis). This is deceptive marketing. It’s possible that Medicare co-insurance as a result of the IRA could be hundreds of dollars less on a cancer drug that costs tens of thousands of dollars per dose and whose list price increases by double digits. But most Medicare patients will see little benefit.”

But the real losers are those patients not on Medicare. Privately insured patients will likely pay much more for drugs owing to the rebates. Democrats tacitly conceded this when they drafted the law. They initially planned to apply the IRA inflation rebates to the private insurance market too. That’s because employers worried that drug makers would offset the cost of the Medicare rebates by raising prices for their workers.

This practice is widespread with Medicare in hospital and physician fees. Because Medicare typically pays less than the cost of care, often much less, providers charge privately insured patients more to compensate. While some commercial insurance providers will not pay the higher rates, many do which raises the cost of healthcare. Private health plans paid hospitals 224% of Medicare rates in 2020, according to a Rand Corp. study. Between 2013 and 2018, prices paid to providers increased at double the rate for commercial insurers as for Medicare fee for service.

How does the IRA cause this?

Medicaid’s mandatory rebates—23.1% for brand drugs and 13% for generics off the average manufacturer price—save Medicaid tens of billions of dollars a year. But drug makers have raised prices that privately insured and Medicare patients pay to offset those Medicaid rebates, especially for drugs used mostly by low-income patients. Medicaid rebates have also reduced the already slim margins for making generic drugs, contributing to the current shortages.

While Biden is bragging that the IRA is lowering prices, the facts don’t support his narrative. Prescription drug prices have increased at a faster rate since the IRA passed, even as overall inflation has moderated. Prescription drug prices increased by 2% during the Trump Presidency owing to greater generic competition, yet they’ve increased 5.5% so far under Mr. Biden. In November they rose at an annual rate of nearly 6%.

The WSJ editors ask: “Has the White House considered that the reason Americans don’t believe that the President’s policies have helped them is because they haven’t?”

The Affordable Care Act, better known as ObamaCare, was passed in 2010 without a single Republican vote. One of the provisions of this disastrous healthcare legislation was the federal enticement to expand Medicaid in every state.

In the original form of the bill, every state would have been forced to accept changes in Medicaid. But the Supreme Court ruled that the federal government could not coerce the states into conformity. Therefore, each state has to decide on their own if they want to accept the Medicaid changes under ObamaCare.

The ObamaCare “hook” promised “free” Medicaid expansion for the first three years with declining support thereafter. Initially, 27 states accepted this offer – mostly blue states with Democratic governance. But shortly thereafter they began having “buyer’s remorse.” The Associated Press reported in July, 2015, “At least 14 states have seen new enrollments exceed their original projections, causing at least seven to increase their cost estimates for 2017.”

In a 11/10/15 post I wrote, “The AP says that California expected 800,000 new enrollees after the state’s 2013 Medicaid expansion. The real number was 2.3 million. In New Mexico, new enrollment exceeded estimates by 44%. In Oregon actual enrollment exceeded expectations by 73% and in the state of Washington by more than 100%.” 

In my home state of Florida, there was a vicious battle over this issue. I wrote then, “The battle in the state of Florida was even more heated. The Florida Senate tried to fold Medicaid expansion into the state’s annual budget. According to the Florida Senate Committee on Appropriations, the cost to the state taxpayers would be $96.6 million in the first two years, and a yet-to-be-determined amount when the state assumed its full 10% share in 2020.”

Fast forward to today and the issue is still being debated. But now we have ten years of experience to analyze. Brian Blasé, writing in The Wall Street Journal, says, “North Carolina has become the 40th state to succumb to federal cash and adopt ObamaCare’s Medicaid expansion for able-bodied working-age adults. A new study from the Paragon Health Institute shows there is little to celebrate. Overall health is unlikely to improve despite this massive increase in public welfare. . . .The evidence against the policy is overwhelming: Expansion leads to a surge in spending but reduces healthcare access for traditional Medicaid enrollees such as low-income children and people with disabilities. And it doesn’t improve health.”

Florida has maintained its resistance to expanding Medicaid and now we who live in Florida can thank Governor Ron DeSantis. Here’s how Blasé describes it: “The Paragon study contains specific estimates for Florida, one of the most populous states that have resisted the policy. If Florida expands Medicaid, some 2.5 million people would newly enroll in the program. Three in 10 Floridians would be on Medicaid, and there would be only 1.5 workers for every Medicaid enrollee. Among people who join Medicaid, 65% would replace private coverage. The cost of expansion to Florida’s state taxpayers would reach $2 billion by the end of the decade. To pay for that, the state would need to raise its sales tax from 6% to 6.4% or significantly cut other public priorities such as education.”

Some might argue that the cost is justified to improve healthcare for low-income residents. I would counter that Medicaid is the worst form of healthcare insurance – and there is evidence that having no insurance at all is better!

Avik Roy, health care blogger for Forbes magazine, has reported the following studies:

• A University of Virginia study found that individuals enrolled in Medicaid are almost twice as likely to die after surgery as privately insured patients, and about one-eighth more likely to die than the uninsured!
• A study published in the Journal of the National Cancer Institute found that Florida Medicaid patients were 6 percent more likely to be diagnosed with prostate cancer at less treatable, later stages than the uninsured. Medicaid enrollees were nearly one-third more likely to be diagnosed with late-stage breast cancer and 81 percent more likely to be diagnosed with melanoma at a late stage than the uninsured.
• A study in the journal Cancer found that the mortality rate for Medicaid patients undergoing surgery for colon cancer was more than three times as high as for the privately insured and more than one-fourth higher than for the uninsured
• A study in the Journal of Vascular Surgery found that Medicaid patients treated for vascular problems, including plaque in their carotid arteries and femoral arteries, fared worse than did the uninsured.

The undeniable fact is that being enrolled in Medicaid is worse than having no insurance at all!

Blasé concludes that those 10 states who have avoided the Medicaid expansion have saved their residents from higher taxes that don’t improve healthcare. But it takes courageous state leadership to stand up to the false narrative promoted by our federal government.

It’s a staple of the Democratic Party to demagogue the issue of healthcare to frighten Americans so they’ll vote Democratic. They have used this deceitful practice successfully in the past and you can be sure they will do so again. Former President Trump just gave them the opening they needed.

The Wall Street Journal editorial board says, “Donald Trump handed his opponents another gift over the weekend by vowing to “terminate” ObamaCare—or at least that’s how Democrats are translating his blunderbuss comments. Democrats are distorting the issue as ever, but they know Mr. Trump has no plan of his own.”

“The cost of Obamacare is out of control, plus, it’s not good Healthcare,” Mr. Trump wrote Saturday on Truth Social. “I’m seriously looking at alternatives. We had a couple of Republican Senators who campaigned for 6 years against it, and then raised their hands not to terminate it. It was a low point for the Republican Party, but we should never give up!”

There is a lot of truth in what Trump said, but as usual, he said it in an undisciplined, off-the-cuff manner that gives his opponents lots of room for criticism, if unjust. It seems that Trump was responding to an earlier editorial by WSJ concerning complaints about ObamaCare from Massachusetts Senator Elizabeth Warren, of all people! (see Senator Warren’s ObamaCare Epiphany)

Warren has finally grasped that ObamaCare is not producing cost-effective quality healthcare as promised. Here is what the editors said: “It took 13 years, but Elizabeth Warren is at long last acknowledging that ObamaCare has increased healthcare prices and industry consolidation. Who would have believed it? Government price controls and profit caps have resulted in unintended consequences.”

Democrats seized on his post, warning that 40 million Americans could lose health coverage if Mr. Trump wins again. In 2024 “the Affordable Care Act and all its transformational benefits will be on the ballot,” Nancy Pelosi declared. “The American people will need to know that if Donald Trump wins next year, he’s coming for your health care.”

On Tuesday President Biden told donors that “if Trump gets his way, it’s all gone.” Democrats successfully ran on protecting ObamaCare in 2018 and 2020, and they are trying to make it a three-peat. Bidenomics isn’t selling with voters, so why not run on the tried-and-true strategy of scare-mongering about losing health coverage?

Recall that Republicans failed to repeal and replace ObamaCare in 2017 despite controlling both houses of Congress. John McCain’s opposition ultimately killed the GOP’s last reform bill, but Mr. Trump’s unwillingness to understand the policy arguments was the bigger problem. His inability to marshal a case to rally public opinion contributed to its failure and the GOP’s losses in the midterms.

Democrats are again making false claims about ObamaCare that Mr. Trump and Republicans seem incapable of refuting. Mr. Trump later attempted to clarify that he merely wants to “replace” ObamaCare with “MUCH BETTER HEALTHCARE,” though he again missed the mark by suggesting that other countries’ socialized health systems are superior to America’s private care – they are not!

The share of Americans with insurance increased by about five percentage-points in the six years after the law’s Medicaid expansion and health exchanges took effect. This resulted in about 17 million Americans gaining health coverage. But most newly insured are young, healthy adults on Medicaid. They could have afforded “skinny” plans (limited benefit plans outside ObamaCare) more appropriate for their age and health risks, but the Biden Administration is restricting those plans.

There are many good Republican ideas to improve our healthcare, but what is needed is someone who can better promote those plans than Trump.