Montanans deserve real affordability

Senator Becky Beard.

Affordability was a defining issue of this election cycle. Montanans and Americans alike are tired of watching grocery bills, utility bills, insurance premiums, and monthly prescriptions consume more of the family budget. They want prices to come down, and they deserve policies designed to make that happen.

But too many Democratic proposals confuse shifting costs with lowering costs. A subsidy can reduce the price of a favored product for one buyer while asking taxpayers to cover the difference. A price control can reduce the number on a government spreadsheet while moving the cost into premiums, taxes, reduced access, or fewer choices. That is not affordability—it's cost-shifting, and it ultimately leads to market inefficiencies that make inflation worse.

The Biden-era Inflation Reduction Act (IRA) is the clearest example of this failed approach of subsidies, price controls, and cost-shifting. President Biden promised the IRA would lower inflation, but years later it's clear it failed, and by many measures made inflation worse.

That should not surprise anyone. Sustained inflation is ultimately a monetary problem: too much money and credit chasing too few goods and services. Fiscal policy matters, too. When Washington spends, subsidizes, and borrows more, it pressures prices upward. At the same time government's interference in markets compels businesses and consumers to follow Washington's rules instead of responding to real demand, real costs, and real competition.

As a case study, consider what the IRA did across prescription drug markets. It created a web of price controls and subsidies. No one should defend high drug prices, and no senior should have to choose between medicine and necessities, but the IRA's drug-pricing provisions are not a durable affordability strategy. They rely on government-set "maximum fair prices" for selected drugs, rather than addressing the underlying reasons patients pay so much: opaque middlemen, distorted insurer incentives, limited consumer choice, and barriers to generic and biosimilar competition.

The first ten IRA drug prices took effect this year. But the price CMS announces is not necessarily the total cost a patient experiences. Patients still confront premiums, deductibles, coinsurance, formularies, and prior authorization. When Washington suppresses one price, the costs do not disappear; they often reappear elsewhere, most often in the form of higher inflation and a larger burden on taxpayers.

There is also a longer-term cost. Drug development requires years of research, clinical trials, manufacturing investment, and risk-taking. A policy that reduces prospective returns through government price-setting can weaken incentives to develop new treatments. It can also distort the competitive markets that eventually bring generic and biosimilar prices down. The result is slower economic growth, one of the best tools we have to bring inflation down.

When it comes to prescription drugs, the answer is not to accept high prices. It is to pursue real reform: protect patients from catastrophic costs, require transparency from pharmacy benefit managers, accelerate generic and biosimilar competition, reduce regulatory barriers, and give consumers more direct purchasing options.

The failures of Biden's IRA are salient today as politicians look to fulfill the "affordability" promises they made on the campaign trail. Price controls might be a convenient way for politicians to buy votes, but they're a horrible way to address affordability in a meaningful way.

Montanans did not vote for a bigger system of subsidies, bailouts, and price controls. They voted for affordability, which means bringing down prices across the board. In the Montana legislature we're prepared to do that by reducing regulations that drive up prices and by keeping government spending in check. Congress should follow our lead with tighter fiscal discipline. They could start by repealing the Inflation Reduction Act's remaining subsidy and price-setting machinery and replacing it with reforms that lower costs rather than merely moving them around.

Distributed by Newsbank, inc.