Cutting Health Care Costs

As his re-election effort begins, President Biden has made it clear that health care, and especially spending, will be at the center of his campaign.

"We have a strong desire to reduce health care costs," he said. "I'm sick of seeing the American people lied to," he said last month. Medicare officials are expected to announce the top 10 drugs at a White House event tomorrow as part of a new program that allows them to negotiate lower drug prices with pharmaceutical companies.

Biden has emphasized health care spending in part because it is a priority for the administration, although more attention is being paid to other policy areas such as climate and infrastructure. His administration has reduced the cost of hearing aids, reduced the cost of health insurance for people buying through the Obamacare exchanges, and cut many costs for Medicare beneficiaries.

"Millions of people will benefit from medical care," Larry Levitt, executive vice president of KFF's health research group, told us. Some people save "a lot of money," he added.

Biden and his supporters have acknowledged that the policy is popular with voters who are ambivalent on economic issues but more conservative on many social issues, as this newspaper has previously reported. This is especially true for swing voters who do not have a four-year college education. The president called his health policy "part of Bidenonomics."

"If you look at the polling data, what we've put forward is very popular," Biden said earlier this year. "He's actually a little more famous than me."

Today's newsletter looks at the list and some criticisms of Biden's health care agenda.

Health care law

The Inflation Reduction Act, which Biden signed into law last year, focuses on funding clean energy, as well as measures to reduce drug costs for Medicare beneficiaries. Almost all Americans age 65 and older use Medicare, and many spend hundreds of dollars out of pocket each year. Those who spend the most on medicine can save thousands of dollars a year, according to KFF.

Why such savings?

• Beginning in January, the law caps insulin costs at $35 a month per Medicare recipient. That number saves about 1.5 million Americans an average of about $500.

• One provision allows Medicare beneficiaries to receive certain vaccines, such as shingles and tetanus, at no cost.

• The law would cap a recipient's total prescription costs at $2,000 a year, though the provision doesn't go into effect until 2025, after the upcoming presidential campaign.

• The law penalizes pharmaceutical companies for raising drug prices above the general rate of inflation. In recent years, about half of the drugs covered by Medicare will qualify. The law also includes a policy that allows Medicare officials to negotiate lower prices with drug companies.

Recent laws may have more impact on health care costs than government spending. But government spending cuts still benefit Americans by reducing financial burdens.

Outside of Medicare

People under 65 don't benefit much from the Biden program, but many do to some degree.

• The Inflation Reduction Act increased tax relief for Americans who buy health insurance subsidized by Obamacare. More than 13 million people save an average of about $800 a year. The policy is limited and expires in 2026.

• In the year An executive order signed by Biden in 2021 would require the FDA to force pharmacies and other retailers to sell hearing aids without a prescription. This change has reduced the cost of hearing aids by more than half. Before the transition, the average cost of hearing aids was around $5,000.

• In the year A bipartisan bill signed by Donald Trump in 2020 to curb such practices, Biden is trying to close some of the loopholes that some hospitals and insurers have used to continue racking up large, unexpected bills.

Possible problems

The main reason for Biden's pressure is that Americans pay more for health care than citizens of other countries. While there are many reasons for this, many experts believe that the main reason is simply because the US government has not paid pharmaceutical companies, hospitals and insurers high prices. In the year An influential newspaper article in 2003 took this argument straight to the headlines: "These Are the Prices, You Stupid!" These higher prices translate into higher profit margins for medical companies.

Explanation of health care costs