Recent major healthcare legislation has taken a similar path: detaching consumers from their healthcare dollars, regulating stakeholders to drive up prices, blaming “market failures,” and advancing central planning. The Inflation Reduction Act (IRA) is the latest example.
The law introduced price controls for prescription drugs under Medicare, claiming it would save taxpayers $160 billion over ten years, though it impacts new drug development. Several benefit reforms were also implemented, including a lower cap on out-of-pocket spending and a new cap on premium growth rates, estimated to cost taxpayers $30 billion over a decade. Congress used the projected net savings to fund green energy initiatives.
However, the Congressional Budget Office recently reported that it underestimated the cost of drug benefit reforms by as much as $20 billion in 2025 alone, meaning that all of the “savings” spent on green energy never existed in the first place.
Worse, a low out-of-pocket cap benefits very few patients, but inflates premiums. While average basic premiums for Medicare Part D declined 12 percent from 2017 to 2020, bids for 2025 nearly tripled, prompting the Biden Administration to launch an unauthorized, multi-billion-dollar use of taxpayer money to fill the fiscal hole created by the IRA.
The IRA also triggered a 26% drop in the number of standalone Medicare Part D plans in 2025, the lowest since the program’s inception, forcing 3.5 million seniors out of their Part D plans and into Medicare Advantage plans. These plans cover prescription drugs, offer more choices and flexible design, and provide more generous benefits for their 33 million beneficiaries.
However, the Biden Administration has imposed regulatory constraints on Medicare Advantage plans, erecting access barriers for patients with chronic conditions, increasing compliance costs for plans, creating friction in the enrollment process, and decreasing reimbursement, says Joseph Grogan, senior scholar at the USC Schaeffer Institute and former Director of the Domestic Policy Council.
“The impact of these changes is a worse program for beneficiaries,” Grogan added. Average out-of-pocket caps will increase by $450 in 2025, with many patients facing sharply increased drug deductibles. Plans have cut popular supplemental benefits such as telehealth, and utilization management will increase, making the program less friendly for patients and providers.
Additionally, 1.5 million seniors will have their plans eliminated. With both the prescription drug program in jeopardy and Medicare Advantage undermined, how can senior Americans expect to access better care?
The Affordable Care Act (ACA) is another example of failed central planning. After its implementation, individual market premiums surged by almost 40%, leading to massive taxpayer subsidies that were further expanded under the American Rescue Plan Act and the IRA.
The law’s perverse incentives, regulatory burdens, and anti-competitive restrictions have made healthcare unaffordable. Instead of achieving affordable care and better health, prices and premiums went up, life expectancy for Americans fell, and deaths of despair rose after the law was implemented.
Why is central planning counterproductive? Because planners never understand market dynamics better than market participants themselves. By empowering the government and disempowering patients and innovators, central planning prevents insurers and providers from offering plans and delivering the care patients want.
After decades following the same path, Congress should consider shifting the focus from central planning to centering on patients: fix policy failures, unshackle all healthcare players to compete for patients and fight disease, and restore health and hope for all Americans.
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