Price Controls Are Failing America's Seniors

Originally published at The Freemen News-Letter. 

​Vice President Kamala Harris, the current Democratic presidential candidate, has proposed price controls for food and groceries—a destructive idea that should be rejected. However, the current administration has already imposed price controls harming Americans, particularly seniors, by controlling healthcare prices under the Inflation Reduction Act (IRA).

Initially promoted as a solution to rising healthcare costs, the IRA has become a financial albatross, especially for seniors. With a staggering price tag of over $1.2 trillion, the IRA was sold as a necessary measure to curb inflation and lower healthcare costs. It has only exacerbated the financial strain on the people it claimed to help, however.

One of the IRA's most glaring failures is its sweeping changes to Medicare’s drug benefits. These changes were intended to make the benefits more robust by eliminating beneficiary cost-sharing at a much lower out-of-pocket limit. Instead, this policy shift has inadvertently transferred significant financial risk onto health plans, leading to unintended consequences, the most notable being a sharp increase in premiums.

The IRA was supposed to save patients money by allowing Medicare officials to set drug prices. However, this provision primarily reduces government expenditure rather than lower costs at the pharmacy counter. This has resulted in immediate premium hikes, with the promise of savings deferred to years later—a classic bait-and-switch. Seniors are paying more now for future benefits that may never materialize.

This surge in premiums is directly linked to the government’s increased involvement in setting drug prices. By imposing de-facto price controls, the IRA has reduced the funding available for developing new treatments and has inserted more bureaucracy between doctors and patients. This interference disrupts the healthcare market's delicate balance, where supply and demand should dictate prices and innovation.

Moreover, the IRA’s impact extends beyond just premium hikes. Medicare beneficiaries are now facing the lowest level of plan choice ever, with many plans exiting the market. This reduction in options and higher costs leaves seniors with fewer and more expensive healthcare plans. The promise that the IRA would make healthcare more affordable rings hollow as seniors are forced to navigate a market with diminished competition and escalating costs.

These poor policy choices have contributed to Medicare Part D premiums increasing by 21% this year, with expectations of a 50% rise next year. This stark increase directly contradicts the IRA’s initial promises and places an undue financial burden on seniors who can least afford it. Furthermore, the number of available prescription drug plans has plummeted, with nearly 100 plans disappearing last year alone. Medicare Advantage recipients may face an additional $400 per year in costs, a harsh reality as inflation erodes the purchasing power of seniors and all Americans.

The consequences of these policies are not confined to the healthcare market. The IRA’s expansive scope and high costs are emblematic of government overreach that stifles economic freedom and burdens taxpayers. The act misallocates resources by funding unreliable green energy projects at taxpayers’ expense and imposing hefty new taxes on businesses, further straining the economy. The IRA’s Medicare policies are hitting seniors hard, despite the administration’s claims of lower costs.

A free-market approach offers a viable alternative to this heavy-handed government intervention. The healthcare system can become more innovative and affordable by reducing regulatory burdens, allowing market forces to set prices, and promoting competition. Policies should focus on removing obstacles for Medicare Advantage plans to negotiate better prices and increase the number of healthcare providers by eliminating unnecessary regulatory barriers like certificate-of-need laws.

Ultimately, the solution lies in embracing economic freedom and limiting government intervention in healthcare. History shows that government solutions often exacerbate the very problems they aim to solve. The IRA’s failures underscore the need for market-based policies that prioritize individual choice, innovation, and quality patient care over bureaucratic control. By doing so, we can ensure that seniors receive the care they need without the prohibitive costs imposed by misguided government policies.