Medicare Agency Just Gave Kamala An In-Kind Contribution
Earlier this month, Kamala Harris’ campaign reported raising over $200 million during her first week as a candidate following Joe Biden’s exit from the presidential race. Additionally, the federal Centers for Medicare and Medicaid Services (CMS) announced a new initiative aimed at stabilizing premiums for seniors’ prescription drug coverage, in part to mitigate potential political fallout as the election approaches.
This announcement is seen as part of a broader trend where Democrats have provided financial support to health insurers to avoid political backlash. The new “premium stabilization demonstration” is a response to changes in Medicare’s prescription drug benefits implemented through the 2022 Inflation Reduction Act, which had led to significant increases in insurance costs. CMS acknowledged the potential for enrollment disruptions due to these changes and proposed subsidies to insurers to prevent high premiums and disruptions before the upcoming election.
This approach mirrors tactics used during the Obama administration, which also involved financial bailouts to insurers in politically sensitive situations. In 2010, the CMS increased payments to Medicare Advantage plans shortly after the Affordable Care Act was passed, a move that faced legal scrutiny. The Obama administration later took similar actions in 2013 in response to backlash over policy cancellations resulting from healthcare reforms. the current initiatives reflect a calculated effort to maintain political stability by shielding seniors from unexpected healthcare costs as elections draw near.
Earlier this month, Kamala Harris’ campaign announced it raised more than $200 million in the first week of her candidacy, following Joe Biden’s withdrawal from the presidential campaign. A far larger, albeit unofficial, in-kind contribution came via the federal Centers for Medicare and Medicaid Services (CMS), which announced a new “premium stabilization demonstration” intended to minimize premium increases for seniors’ prescription drug coverage during the campaign’s final stretch.
It’s the continuation of a pattern: the third use by Democrats in recent years of health insurer giveaways — bailouts of questionable legality — to protect them from political headaches.
Current Bailout
The CMS announcement came due to changes in the prescription drug benefit that Democrats passed in 2022’s so-called Inflation Reduction Act. The combination of richer benefits — including a decrease in seniors’ maximum out-of-pocket drug spend — and structural changes to the benefit design meant that the average monthly bid amount for standalone Part D plans nearly tripled compared to last year.
While not all of that increase would get passed through to seniors’ premiums, CMS conceded “more variation” in plan bids, with “resulting premium changes [that] could create disruptive enrollment shifts.” As a result, CMS announced a demonstration project under which Washington will assume greater responsibility for plans’ cost overruns and provide outright subsidies to insurers.
CMS claims the “additional premium stability” provided by these bailouts could “improve the predictability of [plan] offerings.” With open enrollment for 2025 starting on Oct. 15 — weeks before the November election — the goal seems clear: avoid shocking seniors with high premiums and/or plan cancellations as they head to the polls.
Borrowing the Obama Bailout Playbook
In throwing taxpayer dollars at insurers to prevent politically unpopular dislocation, Biden’s CMS follows a pattern pioneered by none other than Barack Obama. In November 2010, mere months after Obamacare’s passage, CMS announced a nationwide demonstration project increasing payments to Medicare Advantage plans. The Government Accountability Office found that the $8.4 billion demonstration “dwarf[ed] all other Medicare demonstrations … in its estimated budgetary impact.”
Given questions about “the agency’s legal authority to undertake the demonstration,” GAO recommended that CMS cancel the Medicare Advantage giveaway — a recommendation the administration saw fit to ignore. With Democrats having raided Medicare, and specifically Medicare Advantage, to fund Obamacare, officials dreaded the prospect of seniors losing coverage or benefits before the 2012 election. If shoveling taxpayer money at insurers in a legally questionable manner could buy peace, so be it.
The Obama administration returned to this playbook in late 2013, when the combination of millions of plan cancellation notices and a nonfunctioning healthcare.gov created another political headache. After the president’s public apology for what Politifact dubbed the “Lie of the Year” — “If you like your plan, you can keep it” — CMS announced it would allow states to keep noncompliant plans not meeting all of Obamacare’s new regulations.
In addition to violating the president’s constitutional duties — an administration pledging not to enforce federal law for political reasons — the decision also put insurers at risk. They had priced their Exchange products assuming that people with pre-Obamacare plans would be forced to buy new, richer coverage, and now those healthy individuals could avoid buying the more expensive plans.
In 2013, just as in 2010, the administration responded by going to the bailout well yet again. In announcing the option for states to permit noncompliant plans, CMS said that “we intend to explore ways to modify the risk corridor program” in ways that would “help ameliorate unanticipated changes in premium revenue.” Thankfully, Congress took action to prevent this particular bailout — but the pattern of using taxpayer dollars to make up for politically unpopular choices remains.
Democrats Love Throwing Money at Problems
Notice too how the left-wing supporters of socialized medicine quiet their mouths when elected Democrats decide to turn on the taxpayer spigots for insurance companies. Have people like Sen. Bernie Sanders, I-Vt., or Rep. Alexandria Ocasio-Cortez, D-N.Y., raised even a peep to one of these bailouts? Of course not. To them, winning elections matters far more than such trivialities as being consistent with one’s principles.
To be fair, the Trump administration mooted Medicare giveaways during his time in office, but a combination of logistical obstacles and objections from conservatives, including this one, prevented them from taking effect. So when Harris tries to tout drug pricing efforts between now and Nov. 5, conservatives should ask why Democrats always rely on bailouts to paper over the flaws in their government-run schemes.
After all, if the Inflation Reduction Act did such a good job of controlling drug prices, why is CMS using authority it arguably doesn’t have, and money taxpayers can’t afford, giving away billions to insurers?
Chris Jacobs is founder and CEO of Juniper Research Group, a policy consulting firm based in Washington, and author of the book “The Case Against Single Payer.” He appeared in the 1995 “Jeopardy!” Teen Tournament and is on Twitter: @chrisjacobsHC.
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