Senate Democrats’ reconciliation bill “would strip $300 billion from Medicare.”
Advertisement from the American Prosperity Alliance, Posted on July 19
As Senate Democrats race to pass what could be their final piece of legislation before the midterm elections, critics blasted the proposal for hurting older Americans who rely on Medicare.
Here’s a description of an ad sponsored by a group called the American Prosperity Alliance:
“High gas prices, high grocery bills, everything costs too much today. Now, Congress is considering a bill that would strip $300 billion from Medicare, the money older Americans depend on for their drugs, their treatments, their cures. We’re all paying more today, but taking $300 billion out of Medicare? It is simply too much. So call the Congress and ask them to oppose it [President Joe] Biden’s Reckless Spending Package
The ad misleadingly paints what is more accurately characterized as about $300 billion in savings for consumers and taxpayers.
The American Prosperity Alliance maintains almost no online profile. Its website provides only a link to advertisements without any identifying information or pages outside the homepage. When we asked a well-known group of the same name, Americans for Prosperity, whether the American Prosperity Alliance was an affiliate, a spokesman, Bill Riggs, said, “This is not our advertisement and we are not affiliated with this group.”
The ad echoes a theme seen in other attacks on the Democratic-backed proposal, including a Washington Post “The Fact Checker” in June that gave Pinocchio three out of four, saying it contained “significant factual errors and/or obvious contradictions.” PolitiFact rated a similar ad False in July.
The Senate passed the bill on August 7, including key provisions on climate change and corporate taxation. The House is expected to approve the measure this week.
The problem with the ad’s $300 billion claim is that it frames spending cuts to harm older Americans insured under Medicare. That is not the case.
Rather, $300 billion — technically, about $288 billion, according to a recent Congressional Budget Office analysis — stems from a provision in the Democratic bill that would end Medicare’s longstanding bar from negotiating with drugmakers over the prices of some drugs. The inability to negotiate prices meant that Medicare—the largest single buyer in the pharmaceutical market—couldn’t pull its weight to secure lower prices for taxpayers.
The bill is estimated to reduce federal spending by about $300 billion, but it will reflect government savings and not cut benefits; Medicare recipients will receive the same amount of drugs.
“In fact, the bill’s prescription drug savings would save the federal government nearly $300 billion by 2031 without reducing benefits,” wrote the Committee for a Responsible Federal Budget, a group that advocates for deficit reduction and has been skeptical of many of Biden’s legislative efforts, citing their costs.
“Reducing Medicare costs is not the same as reducing benefits,” the committee wrote. “Quite the opposite—many measures to cut costs for government will also cut costs for individuals.”
After combining the drug-cost savings with other health care provisions in the bill, Medicare beneficiaries would see reductions in premiums and out-of-pocket costs, including through an annual cap of $2,000 in out-of-pocket costs, the committee estimated. “In addition to saving the government nearly $300 billion, [bill] would save American families nearly $300 billion,” the committee estimated.
Steve Ellis, president of Taxpayers for Common Sense, another group that wants to keep the deficit low, told PolitiFact that he agrees the bill’s portrayal in the ad is problematic.
“They save what most governments negotiate on prescription drug prices and limit drug price increases to inflation,” Ellis said. “So instead of taking money from Medicare, it’s reducing Medicare costs.”
our ruleThe Coalition for American Prosperity said in an ad that Senate Democrats’ reconciliation bill “would strip $300 billion from Medicare.”
The Medicare drug-price negotiation provision would reduce spending by the federal government by nearly $300 billion. However, this reduction will not represent a cut for Medicare beneficiaries. Rather, by using Medicare’s market power, the government would be able to pay less to provide the same drug.
We rate the statement false.
American Prosperity Alliance, Advertisement, accessed August 4, 2022
American Prosperity Alliance, Homepage, accessed August 5, 2022
Draft of HR 5376
Congressional Budget Office, “Estimated Budgetary Impact of HR 5376, the Inflation Reduction Act of 2022,” August 3, 2022
Committee for a Responsible Federal Budget, “CBO Estimates Drug Savings for Reconciliation,” July 8, 2022
Committee for a Responsible Federal Budget, “IRA Will Cut Medicare Costs, Not Benefit Cuts,” August 2, 2022
The Washington Post, “Democrats reach deal on movie inflation cuts law, after key changes to tax policy,” August 4, 2022
Washington Post Fact Checker, “Manchin Uses Wrong Math to Target Ads on Prescription Drugs,” June 17, 2022
HuffPost, “Drug makers try to scare seniors into stopping Democrats’ economic plan,” August 5, 2022.
PolitiFact, “Ad Targeting Manchin, AARP Misses Out on Medicare Drug Price Negotiations,” July 25, 2022
Email interview with Bill Riggs, spokesperson for Prosperity for Americans, August 5, 2022
Email interview with Steve Ellis, president of Taxpayers for Common Sense, August 5, 2022