Today, the Oversight Committee’s Subcommittee on Health Care and Financial Services will hold a hearing on the impact of the so-called Inflation Reduction Act. The hearing is entitled “The Inflation Reduction Act: A Year in Review.” One year after its passing, one thing is very clear: the IRA has failed to address the problems Democrats promised it would. Lawmakers should make this clear to the American people.
Not only did the bill do nothing to address crippling inflation, but its Medicare savings, the primary source of revenue for this bill, went to fund green energy credits instead of lowering prescription drug costs for enrollees.
Despite its namesake, the Inflation Reduction Act was never about lowering inflation. In fact, at a private fundraising event in Utah, Biden explained that he regretted the name:
“I wish I hadn’t called it that because it has less to do with reducing inflation than it has to do with providing alternatives that generate economic growth.”
Since President Biden took office, prices have risen by 17.4 percent, accounting for a 4 percent decline in real wages and benefits. American families are spending $709 more per month than they did two years ago. Last month, Americans’ credit card debt hit a record $1 trillion, up from $770 billion when Biden took office.
Despite these dire outlooks, the Biden Administration coined the term “Bidenomics” in order to tout “decreasing inflation” and his “strengthening of the middle class.” This is particularly ironic, as inflation has never dropped under Biden. Rather, its growth has slowed down.
The IRA also gave the Health and Human Services Secretary the authority to “negotiate” the price of prescription drugs on behalf of Medicare. This policy was a primary source of revenue for the bill.
In reality, the bill gives the Secretary power to simply determine the price he or she deems acceptable and impose a steep tax of up to 95 percent on companies who charge more. Starting in 2026, 10 drugs will be subject to price controls under Medicare. Roughly 16 percent of Medicare enrollees used these selected drugs in the last year.
This policy, specifically, is expected to reduce innovation, resulting in 135 fewer new drugs, generating a loss of 331.5 million life years. The loss in R&D spending on cancer treatments alone will total $18.1 billion annually. Now, Democrats are suggesting the policy’s expansion through the SMART Prices Act, or even by expanding it to the private market. This would be disastrous, especially when the “benefits” of price controls are only experienced by a small fraction of all Americans.
Of course, the price controls will also be saving Medicare hundreds of billions of dollars. Those savings aren’t going back to seniors in the form of lower drug costs, though. Instead, it was spent to benefit wealthy Americans through green energy tax credits.
The senior-subsidized green energy provisions include a $7,500 tax credit for luxury electric vehicles, a $4,000 previously-owned electric vehicle credit, an annual $1,200 credit for “energy efficient” doors and windows, and more.
As Mark Merritt explains in the Wall Street Journal, “the program’s costs are projected to spiral from about $1 trillion this year to $1.8 trillion in 2031,” negating any deficit reduction supposedly designed to reduce inflation through the law.
At a time when Medicare is set to become insolvent and its enrollees, on average, earn less than $30,000 a year, roughly $280 billion in savings from the bill’s Medicare prescription drug provisions went to these green energy handouts.
Something tells me these enrollees will not be buying a $60,000 Tesla to finally see the “savings” Biden boasts about.
The Inflation Reduction Act was never about helping American families through their crippling financial woes. It was intended to pass key priorities of the Left’s radical climate agenda. During this hearing, lawmakers should call this bill out for what it was: a scam.