Congressional Leaders Get Answers from CBO on Unbudgeted IRA Costs and Multibillion-Dollar Spending Revisions
WASHINGTON, D.C. - Today, the Congressional Budget Office (CBO) responded to a May 20, 2026 letter, authored by Congressman Brett Guthrie (KY-02), Chairman of the House Committee on Energy and Commerce, Congressman Jason Smith (MO-08), Chairman of the House Committee on Ways and Means, and Congressman Jodey Arrington (TX-19), Chairman of the House Committee on the Budget, seeking further explanation for CBO's dramatic upward revision of Medicare Part D spending. Chairmen Guthrie, Smith, and Arrington issued the following statements in response to CBO's findings:
"Earlier this year, CBO's baseline update projected significantly higher costs for Medicare Part D, including an estimated $700 billion in additional Medicare prescription drug spending over the next decade," said Chairman Guthrie. "In response to the May letter I sent, alongside Chairmen Arrington and Smith, CBO highlighted how the problematic design of the Inflation Reduction Act (IRA) has not led to the savings CBO originally projected but has instead led to increased costs for taxpayers and instability in the Part D marketplace. The Part D program is critical to meeting seniors' needs and requires durable regulatory policies to ensure the long-term affordability and availability of prescription drug plans for these beneficiaries."
"Washington Democrats' Inflation Expansion Act was yet another costly promise that failed to deliver lower prices for seniors. Democrats promised lower prescription drug prices, but the Congressional Budget Office is once again confirming that their policies instead increased costs for America's seniors and taxpayers by an additional $700 billion while offering 50% fewer drug plans for them to choose from. Plain and simple, Democrats have made it harder for seniors to afford prescription drugs," said Chairman Smith. "Because of these misguided policies, Americans are paying more for health care than ever before while facing fewer choices and less access to care in return. Meanwhile, powerful health care empires continue to benefit from government-created distortions, loopholes, and misaligned incentives that reward higher spending instead of better outcomes. The Ways and Means Committee will continue fighting to hold these empires accountable, expand access to care, and lower costs - not help powerful interests that have benefited from the status quo."
"The Congressional Budget Office's (CBO) new analysis confirms what Republicans sounded the alarm on for years: The drug pricing scheme in the Inflation Reduction Act fails to deliver the savings Democrats promised. CBO originally estimated these policies would save taxpayers $129 billion. Instead, CBO now confirms the IRA's misguided policies were the major driver behind higher projected Part D expenditures, contributing to a $700 billion deficit increase," said Chairman Arrington. "We have once again confirmed that Democrats, with CBO's analysis in hand, sold the American people a false bill of goods in the Inflation Reduction Act. Combined with the Joint Committee on Taxation's $600 billion miscalculation of the cost of the Green New Deal tax credits, we now know the IRA cost Americans $1.3 trillion more in new deficit spending. Today, taxpayers are left holding the bag due to Democrats' failed experiment in price fixing and their green new deal climate agenda."
BACKGROUND:
- On May 20, 2026, Chairmen Guthrie, Smith, and Arrington penned a letter to CBO regarding its updated scoring of the IRA and updated Part D outlay projections.
- This revision includes an approximately $700 billion increase in projected Medicare Part D outlays and shows that Part D spending per beneficiary in 2035 is now projected to be more than $4,000.
- The Government Accountability Office (GAO) confirmed that the Biden-Harris administration's "Premium Stabilization Demonstration" under Medicare spent $9.8 billion on premium stabilization.
- On July 28, 2026, the Centers for Medicare & Medicaid Services announced the conclusion of the Part D Premium Stabilization Demonstration, discontinuing the demonstration at the end of CY 2026 to return the program to operating under traditional market conditions in CY 2027.
- On July 29, 2026, CBO responded to the Congressional leaders' inquiry, providing additional information on CBO's original estimates and current projections of the drug pricing provisions enacted in the IRA, as well as projections about Part D spending growth in the next decade.
- According to the Medicare Payment Advisory Commission (MedPAC), the average number of stand-alone prescription drug plans available to beneficiaries in 2025 was 14, the lowest number since Part D began.
- MedPAC has also noted a decline in recent years in the average number of benchmark plans, which are $0 premium plan options for beneficiaries receiving the low-income subsidy.