No, Congress is not considering $300 billion Medicare cut

UPDATE: On Aug. 16, President Joe Biden signed the Inflation Reduction Act into law. The original story continues as written below:

On July 27, Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin announced they had come to an agreement on an economic package called the Inflation Reduction Act of 2022. Manchin was one of the last remaining Democrat holdouts for passing a budget bill with many items on President Joe Biden’s agenda.

Since then, several readers have reached out to VERIFY to ask if the bill is cutting Medicare funding. Jay asked if Congress is cutting Medicare to fund the Affordable Care Act, while Veronica asked if it’s true Senator Raphael Warnock, D-Ga., plans to sign a bill that would “take millions of dollars from Medicare” — a claim she saw in a Georgia TV commercial.

THE QUESTION

Will the Inflation Reduction Act of 2022 cut millions of dollars of funding from Medicare?

THE SOURCES

• Inflation Reduction Act of 2022

• American Commitment, a nonprofit conservative group paying for commercials claiming the Inflation Reduction Act cuts millions from Medicare

• Congressional Budget Office (CBO)

• AARP, senior advocacy organization

• Committee for a Responsible Federal Budget (CRFB)

THE ANSWER

No, the Inflation Reduction Act of 2022 will not cut millions of dollars from Medicare funding. 

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WHAT WE FOUND

The text of the Inflation Reduction Act of 2022 does not include any funding cuts to Medicare, and actually sets aside $34 billion in new spending for Medicare. 

What the bill actually does, is implement rule changes that do not cut any benefits but instead save the federal government money. And because of those savings, Medicare will be a less expensive program. 

The AARP, a senior advocacy organization, says the majority of those savings would come from prescription drug price negotiations and rebates encouraging pharmaceutical companies to keep price increases below the rate of inflation. 

Commitment to Seniors, an arm of the nonprofit conservative group American Commitment, is running at least four versions of a commercial that claims the Inflation Reduction Act would make cuts to Medicare. That includes the one running in Georgia (viewable here), which claims the legislation cuts nearly $300 billion from Medicare to “prop up Obamacare, fuel inflation and pad insurers’ profits.”

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Phil Kerpen, president of American Commitment, claimed seniors “will inevitably lose access to drugs if Medicare [is] spending $287 billion less on their benefits” in the Commitment to Seniors press release.

Kerpen is referring to a Congressional Budget Office (CBO) analysis of the Inflation Reduction Act that estimates the bill will save the federal government nearly $288 billion on Medicare costs over the next 10 years.

In a direct response to the Commitment to Seniors advertisements, AARP said the savings “would not be the result of any cuts to the Medicare program.”

Instead, “beneficiaries would be able to get the same medications they do now but those drugs would cost them and Medicare less,” the organization said. 

The nonprofit, nonpartisan Committee for a Responsible Federal Budget (CRFB) also refuted the claims made in the commercials, stating the bill would save the federal government nearly $300 billion without cutting benefits. CRFB estimates the cost-saving measures would also save individuals and businesses $300 billion over the next 10 years, thanks to lower premiums and cost sharing. 

“Unfortunately, attacking cost-reduction policies as benefit cuts is a bipartisan tradition,” CRFB said in reference to similar criticisms made about potential Medicare savings directed at the Trump Administration, the Obama Administration and the late Senator John McCain (R-Az.)

Finally, Senate Democrats estimate the Inflation Reduction Act will invest $64 billion in Affordable Care Act subsidy extensions over the next 10 years, a far smaller investment than its expected savings on prescription drug prices. Senate Democrats estimate the bill will reduce the deficit by $300 billion over the next 10 years.

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