COVID Response Back in the News as Dr. Fauci Pleads the Fifth

Today’s newsletter begins with yesterday’s Senate hearing, in which Dr. Anthony Fauci invoked the Fifth Amendment rather than answer questions about his role in the federal COVID response. I then highlight legislation introduced by Representative Blake Moore of Utah to combat health care fraud. I conclude by discussing CMS’s decision to end an expensive taxpayer-funded bailout that was created in response to Medicare Part D premium growth after the Inflation Reduction Act (IRA) and sent billions of additional taxpayer dollars to health insurers.

Fauci Pleads the Fifth

Yesterday, Dr. Anthony Fauci appeared before the Senate Homeland Security and Government Affairs Committee chaired by Kentucky Senator Rand Paul. The hearing came after Chairman Rand Paul released extensive excerpts from Fauci’s personal notes, made on his government computer, from late 2019 through much of the pandemic. Fauci’s notes touch on the origins of the virus, its severity, and the evolving public narrative. His personal reflections often diverged substantially from what he and other members of the public health establishment were claiming publicly. His contemporaneous notes also show that he became increasingly focused on his public image, controlling the debate, and winning accolades and awards.

The government’s response to the COVID pandemic is the most important government health policy response over the past several generations. The benefit of hindsight has made it clear that many government actions, including those of Dr. Fauci, created confusion among the American public and had extremely negative consequences for well-being, particularly through the effects of lockdowns on families, children, and the elderly.

Based on what has been publicly released, there are major discrepancies between Fauci’s private records and public messaging. That public posture contributed to an environment in which dissenting scientists and citizens faced censorship, social ostracism, and professional repercussions. This stifling of scientific debate led to prolonged school closures, forced vaccinations, business closures, job loss, and the erosion of Americans’ trust in public health guidance.

Transparency and accountability are essential to representative government. This hearing was important not because it changes what happened during the pandemic, but because understanding how decisions were made will be essential to improving the federal response to public health emergencies in the future and ensuring these devastating mistakes are not made again.

I put out a list of seven questions we hoped Dr. Fauci would answer to provide perspective on the federal response. Congress has a legitimate oversight responsibility to determine what happened during the federal COVID response, including whether the U.S. government contributed to the pandemic by funding gain-of-function research at the Wuhan laboratory and what the basis was for government mandates and edicts. Unfortunately, and despite receiving a pardon from President Biden, Dr. Fauci repeatedly invoked the Fifth Amendment to avoid congressional oversight.

Paragon’s research on COVID focused on the arbitrary nature of so much of the public health establishment’s guidance. Moreover, our Freedom Wins paper, which evaluated health, economic, and education outcomes based on the severity of state COVID restrictions, found that lockdown states did not have better health outcomes but had much worse economic and education outcomes.

Anti-Fraud Fund Act of 2026

The Anti-Fraud Fund Act of 2026, introduced by Congressman Blake Moore of Utah, would put $28 billion into the Health Care Fraud and Abuse Control Program over four years. The funding would expand the number of investigators, attorneys, and technology tools available to go after fraud in government health care programs. These programs lose hundreds of millions of dollars every day to fraud and improper payments. The Congressional Budget Office (CBO) confirmed its preliminary estimates showing at least $168 billion in net savings over 10 years, or about seven dollars saved for every dollar spent. The Committee for a Responsible Federal Budget endorsed this legislative effort to reduce fraud and improper payments.

The funding will provide resources to identify problems earlier, preventing more improper payments before they occur. That approach is different from the usual model of paying claims and then trying to recover the bad ones later. Stronger tools up front would preserve more resources for the people these programs are meant to serve and protect taxpayer dollars from those who defraud the programs for personal enrichment. Although better oversight and enforcement are important and would generate real savings, the main issue is that federal health programs create numerous incentives that reward waste, tolerate abuse, and invite fraud. When states, insurers, providers, and enrollees are rewarded for maximizing federal payments rather than improving value, waste, abuse, and fraud become predictable outcomes rather than isolated events. For a comprehensive set of our recommendations to reduce wasteful and fraudulent spending in government health programs, see our new report that I authored, Restoring Fiscal Sustainability to Federal Health Programs: Reforming the Incentives that Drive Health Care Spending.

Ending the Bailout of the Inflation Reduction Act

Yesterday, CMS announced that it will end the Medicare Part D Premium Stabilization Demonstration after plan year 2026. That is the right decision. The demonstration, announced by the Biden administration in July 2024 just days before Part D bids were due, was created after the IRA’s redesign of the Part D benefit caused plan bids to increase far more than policymakers anticipated. The Biden administration established it as a three-year demonstration, and it is now ending as originally designed. Rather than allowing premiums to reflect the new benefit structure, the Biden administration created what it called a “demonstration” that provided billions of dollars in additional subsidies to insurers in a cynical ploy to offset premium increases before the 2024 election.

We criticized the policy from the beginning. In Bailing Out Bad Policy, we explained why the program was not a genuine demonstration but a taxpayer-funded bailout designed to mask the predictable consequences of the IRA. In subsequent analyses—including “Free” Is Never Free: Restoring Market Reality to Part D, What’s Killing Part D: The Policy Failures of the IRA, and The IRA Caused Medicare Part D Spending to Soar—we showed that the IRA fundamentally increased federal spending and delayed the market’s adjustment through temporary taxpayer subsidies. The IRA set a cap on beneficiary out-of-pocket spending but set it far below a previously agreed-upon bipartisan level and counted costs not paid by the beneficiary to count towards the cap. This had the effect of drastically increasing premiums—and therefore taxpayer-funded subsidies—for the vast majority of seniors.

AEI Senior Fellow and new member of MedPAC Ben Ippolito wrote yesterday that continuing temporary subsidies would have further distorted plan incentives and delayed necessary market adjustments. I encourage readers to read his excellent analysis.

The increase in Part D spending has proven far larger than policymakers anticipated. In a letter yesterday responding to inquiries from members of Congress, CBO reiterated the findings from its February 2026 baseline report that projected Medicare Part D spending over the next decade to be roughly $700 billion higher than it projected in its 2025 baseline. CBO says the leading driver of $550 billion of that increase was the Part D redesign, which led to significantly higher bids than expected. CBO found that 2026 plan bids increased by about 35 percent—far above the roughly 5 percent increase it had expected. Well before the CBO’s February analysis, it was obvious that plan bids and spending were increasing; the Biden administration responded with a multi-billion-dollar taxpayer-funded bailout that temporarily masked the IRA’s true cost.

Because taxpayers already financed roughly 75 percent of the Part D benefit, the IRA’s redesign increased both taxpayer costs and beneficiary premiums. As the figure below illustrates, Medicare Part D spending has risen well beyond CBO’s original projections, highlighting the growing cost of the law to taxpayers. Ending the demonstration restores greater market discipline. The larger problem, however, remains the IRA’s costly redesign of Part D, which has proven substantially more expensive than policymakers originally projected and will continue to impose growing costs on taxpayers.