Medicare Expected To Save $280 Billion With Cheaper Prescription Drugs Due to IRA

Medicare is expected to save more than $280 billion by making prescription drugs cheaper over the next 10 years. This provision is due to the Inflation Reduction Act (IRA) signed by U.S. President Biden into law.

Inflation Reduction Act [Photo: CBS News]

According to Decker, an analysis was performed by the Congressional Budget Office of the IRA. This analysis evaluated that some provisions in the IRA would save Medicare with more than $280 billion over the next 10 years. However, unlike what the criticisms claim, the money is cost savings and not cuts to Medicare spending. This means that the IRA will continue to provide its services at a cheaper cost to taxpayers.

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Provision to the IRA

An article on the KFF says that the Medicare currently negotiates with several drug companies to get cheaper prices for patients’ medications. Unlike before the IRA was passed, Medicare was not legally authorized to do so. The policy groups for healthcare and budget also concur that the claims about cuts in Medicare spending are groundless.

In addition, the Committee for a Responsible Federal Budget also stated that the claims were misleading attacks during the midterm elections. This is because the IRA’s prescription drugs savings provision would actually let the federal government save almost $300 billion without cutting any spending through 2031. Instead of cutting, the IRA will actually reduce the premiums and out-of-pocket expenses.

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