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Chris Pope writes for City Journal:
For its first 15 years, Medicare’s prescription drug benefit was a fiscal success story: it had cost much less than expected, and its expense was rising slower than inflation. But from 2021 to 2025, the program’s price tag suddenly jumped, from $105 billion to $182 billion. For 2026, it is projected to leap again, to $222 billion.
The main driver of this development is not expensive new drugs but an enormous miscalculation of the cost of the 2022 Inflation Reduction Act, which the Biden administration boasted would save taxpayers billions.
Congress established a prescription drug benefit for Medicare beneficiaries in 2003, almost 40 years after instituting coverage for hospitalizations and physician services. Medicare Part D makes Prescription Drug Plans (PDPs) responsible for purchasing drugs from manufacturers—in return for monthly payments funded 92 percent by public subsidies and 8 percent from beneficiary premiums.
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