A new Congressional Budget Office analysis has thrown a wrench into Democratic messaging on Medicare, revealing that the party’s signature drug pricing law is costing far more than projected—and that Republicans who want to claw back the spending are being cast as villains for ‘cutting’ the program.
The CBO’s July report, a rare 18-page mea culpa from the budget office, concedes that its original estimates of the Inflation Reduction Act’s drug pricing provisions were dramatically wrong. Instead of the projected $129 billion in deficit reductions over the 2022–2031 period, the CBO now says those provisions will actually increase deficits over the same window.
“Since then, on the basis of new information, CBO has revised its projections,” the report states. “Evidence now indicates that the spending reductions attributable to drug price negotiation and inflation rebates have been smaller than CBO originally estimated. The costs of the Part D redesign have been significantly larger because of greater-than-anticipated increases in spending because of greater use of prescription drugs.”
The report, which was published in late July and first highlighted by The Federalist, details how the left’s talking points have outpaced fiscal reality. Drug price “negotiation” failed to deliver the estimated 50 percent reduction in net prices. Inflation rebates, which were supposed to bring in $2.3 billion in Part B rebates in 2023 and 2024, yielded just $136 million—about 6 percent of the original projection. And plans this year anticipated a 35 percent increase in annual costs per enrollee, versus the CBO’s estimate of only 5 percent.
The July report is just the latest in a series of revisions that have ballooned the IRA’s price tag. Last November, CBO said the law could raise Part D spending by as much as $500 billion over a decade. In February, it bumped its estimates of Part D spending over the coming decade by another $700 billion, with $550 billion of that largely attributable to the IRA’s redesign of the program.
The numbers grow even starker when you expand the timeline. This year’s Medicare trustees report, compiled by staff from the Medicare actuary, raised the long-term (75-year) cost of the Part D program by $5 trillion—roughly one-third—compared to last year’s report, driven in large part by the IRA changes.
The pattern extends beyond Part D. Between June 2024 and January 2025, CBO increased its projections for Medicaid spending over the coming decade by $817 billion. Much of that growth came from unilateral regulatory actions by the Biden administration: expansions of Medicaid eligibility, a rule limiting states’ ability to enforce program integrity measures, another rule allowing states to increase provider reimbursements, and higher spending on GLP-1 drugs, which the administration wanted to require states to cover.
Again, no one voted for that spending increase. And again, the press largely ignored it. The CBO also raised baseline Medicaid spending by another $700 billion in February, a move that went largely unnoticed outside budget-wonk circles. Even after accounting for policy changes in last year’s budget reconciliation bill, the CBO’s projections for Medicaid spending over the next decade are more than $250 billion higher than they were in June 2024, the final year of the Biden presidency.
Yet the public conversation remains dominated by so-called “Republican cuts” to Medicaid and Medicare. The Federalist’s analysis argues this is no accident: Democrats have perfected a playbook of passing or enacting massive spending increases by stealth, then attacking any Republican effort to scale them back as an assault on beloved entitlement programs.
The disconnect raises two obvious questions, according to the outlet: Has the press reported on this explosion in unanticipated spending? And if Republicans propose repealing the IRA’s drug pricing provisions—on the grounds that Congress didn’t know the bill would cost so much when it voted—would they be attacked for wanting to “cut” Medicare? The Federalist’s answer to both is a knowing “yes.”
The political stakes are significant. As the 2026 midterm elections approach, Democrats have leaned heavily on the message that Republicans want to gut Medicare and Medicaid. But if the CBO’s revised numbers become more widely known, that attack line could lose some of its punch. Republicans could argue they are not cutting benefits but simply trying to correct a law whose costs were concealed at the time of its passage.
The Federalist, a conservative outlet, is clearly sympathetic to that framing. But its reporting highlights a factual shift that even left-leaning budget watchers may find hard to ignore: the IRA’s drug pricing provisions, once billed as a deficit-reduction measure, are now projected to add to the deficit. And the stealth nature of the spending—through regulatory changes and revised estimates rather than explicit appropriations—has made it difficult for the public to track exactly what is happening.
Whether this will change the political narrative remains to be seen. But the CBO’s own admission that it got the numbers horribly wrong provides ammunition for those who argue the Democratic spending spree was sold to the public on false premises.
Source: thefederalist.com — https://thefederalist.com/2026/08/24/democrats-spin-their-medicare-spending-explosion-into-a-narrative-about-gop-cuts/