Medicare-Eligible Population Backs Biden’s Plan to Cut Beneficiaries’ Costs, Address Solvency

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President Joe Biden has made health care a top priority of his administration, both in terms of addressing the immediate emergency of the COVID-19 pandemic and long-term revisions that are dramatically reshaping the Medicare program.

In 2022, Biden and congressional Democrats used the Inflation Reduction Act to grant Medicare the power to negotiate drug prices with pharmaceutical companies, a significant change lawmakers and experts have advocated for over the past several years. The president is now trying to expand on those powers in his fiscal year 2024 budget proposal, among other health measures that are notably popular.

A new Morning Consult survey shows that people 65 or older — the age of the Medicare population — overwhelmingly support Biden’s Medicare proposals that aim to expand coverage and reduce beneficiaries’ health costs. Among the demographic, 83% said they support measures to expand Medicare’s newly granted power to negotiate drug prices and cap out-of-pocket spending on generic drugs for certain chronic illnesses at $2 a month.

The provisions are popular across most demographics as well, with at least 3 in 5 Americans supporting each measure.

Medicare drug spending has skyrocketed since the late 2000s

The White House has put expanding Medicare’s power to negotiate drug prices at the center of its budget proposal. The measure builds on powers granted in the IRA and is being framed as a way to lower Medicare spending and help the program remain solvent.

Drug spending for Medicare Part D, the program’s prescription drug coverage, has more than doubled since the late 2000s. According to a Medicare Payment Advisory Commission July 2022 report, Medicare Part D spending grew from $73.7 billion in 2009 to $198.6 billion in 2020, with an annual average growth rate of 9.4%. Meanwhile, the program grew from 26.5 million beneficiaries to 46.3 million over the same period, or a growth rate of 5.2%.

Medicare Part B drug spending has more than doubled from $15.4 billion in 2009 to $40.7 billion in 2020, according to MedPAC.

The Congressional Budget Office projects the IRA price negotiation provision will save the program almost $100 billion by 2031.

“This provision is noteworthy because for many years the Medicare program has been explicitly prohibited from any role in price negotiations between drug manufacturers and Part D plan sponsors,” said Juliette Cubanski, deputy director of Kaiser Family Foundation’s program on Medicare policy. “The Inflation Reduction Act provision is meaningful, both in terms of the sort of symbolic nature of it as well as the real dollars attached to the provision in terms of generating substantial savings to the Medicare program.”

The historic provision does have a list of stipulations around the process, such as which drugs can be part of negotiations, the limited number of drugs the government will negotiate the prices of and the time frames around how long a drug can be on the market before it can be part of negotiations.

Steve Knievel, an advocate for Public Citizen’s access to medicines program, said the drug negotiation measures passed as part of the IRA are scaled back from a 2019 resolution that Democrats mostly supported. Knievel said that while the IRA provision saves Medicare nearly $100 billion — and Biden’s 2024 budget proposals will trim another $160 billion if enacted — the further-reaching 2019 resolution would have saved the program roughly $450 billion.

Many Americans support rolling out Medicare changes over several years

The Centers for Medicare and Medicaid Services released guidance for its timeline for the negotiations process in March: The first 10 Part D drugs will be posted by Sept. 1, the negotiated maximum fair price will be published by Sept. 1, 2024, and the prices will take effect Jan. 1, 2026.

While there is an understanding that it takes time to implement a new system, the 2026 time frame is too long, Knievel said. Conversely, Cubanski said the deadline is the earliest CMS could have realistically pulled the program off because the system is so complex, requiring the agency to develop new processes and hire new experts.

Morning Consult’s survey showed that nearly half of U.S. adults (47%) said they support the implementation of the new Medicare policies over several years, including the 2026 timeline for drug negotiations, while nearly 3 in 10 said they oppose it and 1 in 4 said they do not know or have no opinion.

Among all U.S. adults, nearly 3 in 5 said they prefer Medicare reforms in general to take place as quickly as possible to benefit enrollees sooner, and 1 in 5 said they prefer reforms to happen slower to not disrupt the existing system.

Knievel argued that certain stipulations on the negotiation process are industry concessions and should be eliminated, such as putting a time frame on drugs before prices can be negotiated. Under the current plan, there is a nine-year window for small-molecule drugs from Food and Drug Administration approval and a 13-year window for biologics before the products can be part of the negotiation process. While Biden’s budget proposal would drop both time frames down to five years, Knievel believes that negotiations should begin immediately.

The White House also proposed to expand negotiations to include more drugs. Currently, CMS will negotiate 10 Medicare Part D drugs in 2026 and then expand each year to a maximum of up to 20 Part B or Part D drugs after 2028.

However, Biden’s plans to expand the program may not happen in the current Congress and amid fresh Republican criticisms of the program.

“There's no interest among congressional Republicans in expanding this program. Probably the opposite is true,” Cubanski said. “It's not to say that Democrats wouldn't want to see that — or at least some Democrats wouldn’t want to see that — but the reality of it is the votes aren't there.”

As Biden looks to boost Medicare funding, nearly 2 in 3 Americans are concerned about the program’s solvency

The White House has sold the expansion of Medicare’s drug negotiation powers and a Medicare tax rate increase on people earning over $400,000 as tools to keep the program solvent for at least 25 years.

Medicare spending accounted for 21% of U.S. health outlays in 2021, the second most after private health insurance, according to CMS. Program spending has grown from $544.6 billion in 2011 to $900.8 billion in 2021 as the beneficiary population has ballooned.

Nearly 2 in 3 Americans are concerned about Medicare’s solvency, while roughly 1 in 6 are not concerned and a similar share said they don’t know or had no opinion, per Morning Consult data. Nearly half of U.S. adults (47%) said they trust the Biden administration to protect Medicare solvency, while roughly 2 in 5 said they do not trust the administration to protect solvency.

As the White House and Congress negotiate on proposals to help boost Medicare funding, a new report from the Social Security and Medicare trustees shows that the program will not be able to cover full benefits by 2031, three years later than previous estimates.

Whether through Medicare provisions or expanding subsidies for Affordable Care Act health plans, Biden has made health care a top priority and potentially the center of his expected 2024 presidential run.

One of his most popular proposals is to expand a $35-a-month cap on insulin costs for Medicare beneficiaries to all Americans. Among all U.S. adults, 70% said they “strongly” or “somewhat” approve of the proposal, per Morning Consult data, including 82% of people 65 or older.

Addressing insulin costs has become a popular topic, with top manufacturers announcing price reductions — although they could actually benefit from the cuts — and lawmakers introducing legislation to limit spending.

Knievel said that while the $35 cap on patient’s out-of-pocket costs will help people, addressing the price of insulin products would be a more effective way to reduce overall spending, an approach that Sen. Bernie Sanders (I-Vt.) is taking with his legislation to cap prices at $20 per vial.

Along with the proposed cap on insulin costs, IRA provisions like capping beneficiaries’ out-of-pocket drug spending at $2,000 and drug inflation rebates will help lower spending for both the Medicare program and individuals, Knievel said. But he argued that more still needs to be done to address the burden people feel because of health costs.

The provisions passed by Congress are “monumental,” Knievel said, but “there are many people who are not going to feel it.” The political pressure to lower people’s health spending is “simply not going away.”