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• Under a bill that all Senate Democrats voted for and that President Joe Biden signed into law, Medicare was permitted for the first time to negotiate drug prices with manufacturers.
• On the government’s budget scorecard, this is projected to save between $237 billion and $288 billion in federal outlays.
• But that reduction wouldn’t represent cuts to Medicare beneficiaries. Rather, by leveraging Medicare’s market power, the government would be able to pay less for certain prescription drugs, thus preserving the same level of benefits for less money.
In an interview on CNN’s "State of the Union," Sen. Rick Scott, R-Fla., repeated a talking point previously used by the National Republican Senatorial Committee — which Scott chairs — in campaign ads.
On the show’s Oct. 30 edition, host Dana Bash noted a recent Democratic attack line against GOP candidates, asking Scott, "So, just a simple yes or no, do Republicans want to cut Medicare and/or Social Security?"
Scott replied, "Absolutely not. And the Democrats just cut $280 billion, all Democrats in the Senate and House voted to cut $280 billion out of Medicare just two months ago. And then they want to say Republicans want to cut something?"
After some cross-talk, Bash said, "Just want to correct the record. The Democrats' plan, which is now law, didn't cut … Medicare benefits. It allowed for negotiation for prescription drug prices, which would ultimately bring down the price and the costs for Medicare consumers."
When the National Republican Senatorial Committee previously made this argument in an ad on behalf of Herschel Walker, Georgia’s U.S. Senate candidate, we rated it False. (Other outlets, including The Washington Post Fact Checker, CNN, and FactCheck.org have reached similar conclusions on equivalent statements.)
The ad cited Senate roll call vote 325 to back up its assertion. This was the final vote to approve the Inflation Reduction Act, a Biden-backed bill that included provisions addressing climate change, the taxation of very large corporations, and Medicare drug pricing, among other topics. It passed both chambers with only Democratic votes, and it received Biden’s signature.
The $280 billion — technically, somewhere between $237 billion and $288 billion, depending on how the numbers are estimated — stems from a provision in the Democratic bill that would end the longstanding bar that kept Medicare from negotiating with drugmakers over the price of certain medicines. Not being able to negotiate prices has meant that Medicare — the pharmaceutical market’s biggest single buyer — could not leverage its weight to secure lower prices for taxpayers. This has been part of the reason U.S. pharmaceutical prices have been higher than those in any other major country.
Although the bill is projected to reduce federal spending by about $280 billion, that would reflect government savings and not benefit cuts. In other words, Medicare recipients would receive the same amount of medicines, just for less taxpayer money.
"In reality, the bill's prescription drug savings would save the federal government nearly $300 billion through 2031 without cutting benefits," wrote the Committee for a Responsible Federal Budget, a group that favors deficit reduction and has been skeptical of many of Biden’s legislative efforts, citing their cost.
"Lowering Medicare costs is not the same as reducing benefits," the committee wrote. "Quite the opposite — many measures to reduce costs for the government would reduce costs for individuals as well."
After combining the drug-cost savings with the bill’s other health care provisions, Medicare beneficiaries would see decreases in premiums and savings, including through a $2,000 annual cap on out-of-pocket costs, the committee projected.
Steve Ellis, president of Taxpayers for Common Sense, another group seeking to keep deficits low, told PolitiFact in August that the claims of Medicare cuts from this provision are problematic.
"Those are savings resulting mostly from the government negotiating prescription drug prices and limiting drug price increases to inflation," Ellis said. "So rather than taking money out of Medicare, it is reducing Medicare costs."
Scott’s office did not respond to an inquiry for this article. (The National Republican Senatorial Committee also didn’t respond to our previous article on the Georgia ad.)
Scott noted in his exchange with Bash that the change "means we're going to have fewer lifesaving drugs." Pharmaceutical companies have long argued that cutting prices for prescription drugs will drain the industry of money it uses for researching and testing new drugs. The scale of the impact is uncertain, though the Congressional Budget Office, Congress’ nonpartisan number-crunching agency, estimated a relatively small impact, with one fewer drug in the first decade, four in the next decade and five in the decade after that.
But even if the impact on future drugs is significantly greater than that, as the industry argues, it wouldn’t support what Scott said. At most, the Democratic bill would have saved the government $280 billion while having some longer-term, negative, secondary impacts. It would not simply be a cut to Medicare’s budget.
Scott said, "All Democrats in the Senate and House voted to cut $280 billion out of Medicare just two months ago."
This claim is wrong. The federal government would see its outlays reduced between $237 billion and $288 billion as a result of a Medicare drug-price negotiation provision. However, that reduction wouldn’t represent cuts to Medicare beneficiaries.
Rather, by leveraging Medicare’s market power, the government would be able to pay less to provide the same medicines.
We rate the statement False.
Rick Scott, interview on CNN’s "State of the Union," Oct. 30, 2022
National Republican Senatorial Committee, ad, released Sept. 16, 2022
American Prosperity Alliance, ad, accessed Aug. 4, 2022
Senate roll call vote on the Inflation Reduction Act
Kaiser Family Foundation, "Explaining the Prescription Drug Provisions in the Inflation Reduction Act," Sept. 22, 2022
National Academy of Social Insurance, "Medicare Provisions of the Inflation Reduction Act of 2022," accessed Sept. 28, 2022
Congressional Budget Office, "Estimated Budgetary Effects of H.R. 5376, the Inflation Reduction Act of 2022," Aug. 3, 2022
Committee for a Responsible Federal Budget, "CBO Estimates Drug Savings for Reconciliation," July 8, 2022
Committee for a Responsible Federal Budget, "IRA Would Lower Medicare Costs, NOT Cut Benefits," Aug. 2, 2022
Washington Post, "Democrats, Sinema reach deal on Inflation Reduction Act, after key changes to tax policies," Aug. 4, 2022
Huffington Post, "Drugmakers Try To Scare Seniors In Last-Ditch Effort To Stop Democrats’ Economic Plan," Aug. 5, 2022
Washington Post Fact Checker, "Ad targeting Manchin on prescription drugs uses misleading math," June 17, 2022
FactCheck.org, "NRSC’s Misleading Attack on Warnock," Sept. 22, 2022
CNN, "Fact check: Republican attack ads against Warnock and Kelly mislead about Medicare," Sept. 27, 2022
PolitiFact, "Democratic bill didn’t 'slash' Medicare spending. It would get the same drugs, cheaper," Sept. 29, 2022
PolitiFact, "Ad targeting Manchin, AARP misses on Medicare drug price negotiations,"July 25, 2022
PolitiFact, "No, Senate bill won’t strip $300 billion from Medicare," Aug. 5, 2022
Email interview with Bill Riggs, spokesman for Americans for Prosperity, Aug. 5, 2022
Email interview with Steve Ellis, president of Taxpayers for Common Sense, Aug. 5, 2022
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