President Biden belatedly released his fiscal year 2024 budget this month, but his proposals do little to actually make the Medicare program sustainable for future generations. After weeks of back and forth with congressional Republicans, with each side accusing the other of supporting Medicare cuts, Biden’s plan to shore up the problem relies on accounting gimmicks. Even worse, the provisions to fix drug prices and raise taxes will worsen Americans’ health and finances in the years to come.
The rising cost of federal health spending is the single greatest fiscal challenge the U.S. faces. Aside from interest payments, unsustainable spending in programs like Medicare and Medicaid is the biggest driver of federal debt. Reforms to slow this spending must happen soon, or painful cuts will become inevitable to avoid a fiscal crisis. Ignoring this problem is not “protecting” Medicare.
Medicare’s unsustainability does not primarily stem from drug spending. Less than 20 percent of Medicare expenditures are on drugs. But Biden’s proposed $200 billion in Medicare savings comes exclusively from that sliver. His budget does this by expanding the federal government’s power to dictate prices, including doubling down on Inflation Reduction Act price controls and even expanding similar policies to drugs covered by private insurance.