What do insurers do when the costs of their plans go up? They raise premiums, of course. We don’t know yet what premiums will be in Part D but, we do know they will jump because the average bid submitted by plans for stand-alone PDPs has skyrocketed from $64.28 in 2024 to $179.45 in 2025 – and roughly 25 percent of the increase will be borne by beneficiaries and 75 percent borne by taxpayers.

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This could have been avoided with a higher out-of-pocket cap. The original bipartisan Part D redesign had a cost cap of $3,100, which would have limited both premium increases and taxpayers’ liability. It’s worth noting that former CBO director Doug Holtz-Eakin estimates that less than three percent of Medicare beneficiaries were facing out-of-pocket costs greater than $2,000. So instead under the partisan IRA, Part D premiums have been driven much higher.

This was a back-door way for Democrats to ration access to costly drugs while shifting the political blame for doing so to insurers.

The gambit backfired as insurers are raising premiums. CMS’s intervention is another example of how the IRA will cost far more than Democrats claimed. Nobody knows how much more since CMS isn’t doing a normal rule-making that requires a cost analysis.

Announcing huge premium increases for seniors going into the Democratic Convention would have spoiled the party. The Premium Stabilization Demonstration means that bids will need to be recalculated, delaying publication of premiums until mid-September, when they will be more reasonable due to the demonstration’s taxpayer subsidy. As a political bonus, the delay in the premium announcement gives the Administration a week and a half to tout “savings” from the IRA’s drug price setting component, scheduled to be announced September 1st.