The Inflation Reduction Act was recently passed in the House of Representatives with a party-line vote of 220 – 207. In the Senate, Vice-President Kamala Harris broke a tie vote, again along party lines. President Biden signed it into law on August 16.
The law will affect much of the economy, but this article looks at healthcare. This law will have the greatest impact on improving the cost and quality of healthcare in this country since the passage of Obama’s Affordable Care Act in 2010, especially for senior citizens on Medicare.
For 33 years Democrats in Congress have been attempting to lower prescription drug prices by allowing Medicare to negotiate prices. This new law brings that struggle to a successful conclusion.
Americans currently pay two to three times what citizens of other countries pay for prescription drugs. As an example, when my wife was suffering from Lyme Disease a number of years ago, she was prescribed a liquid medication, which we, with a touch of dark humor, referred to as liquid gold because of its color and the fact that locally it cost almost $1,000 for a one-month supply. We were able to get it from India, via Germany, for one-tenth of that price! Another example: a GAO study found that Spiriva, a drug used to control asthma in the United States, costs an average of $250 in the U.S., but between $30 and $52 in France, Australia, and Canada. The new law makes it possible for Medicare to negotiate with pharmaceutical companies on the cost of some medications, to bring the cost down.
Millions of Medicare recipients could see their drug costs go down substantially.
According to AARP, the first drugs to enter price negotiations may include:
Pharmacy costs under Medicare Part D will be capped at $2,000 per year beginning in 2025. That will benefit about 25,000 Medicare beneficiaries in Maryland alone. Currently, Medicare beneficiaries with conditions such as cancer, multiple sclerosis, and lung disease can pay thousands of dollars in prescription drug costs.
Over three million Medicare recipients with diabetes will benefit from a cap on the cost of insulin at $35 per month. The law also requires pharmaceutical companies to pay a rebate if they increase drug prices faster than inflation. That will result in savings for the federal government and further reduce the out-of-pocket costs for Medicare beneficiaries, beginning in 2023.
The Act also expands eligibility for full Part D Low-Income Subsidies, beginning in 2024.
Beginning in 2023, the Act will require zero cost-sharing for vaccines such as the vaccine for shingles, for Medicare Part D beneficiaries. At present, patients receiving some vaccines have to pay for a portion of the cost.
Millions of Americans will also save an average of $800 annually on health insurance premiums. Three million more Americans will have health insurance than would have without the law. Currently, the uninsured rate is at a record low of 8%. Health insurance reduces the frequency of bankruptcies as well as evictions. People with insurance through the Affordable Care Act will benefit because the new law extends federal subsidies for premiums.
In a different, but certainly related, area, Americans will be breathing cleaner air, since the law supports an increase in the use of clean energy and reduction of particle pollution from fossil fuels. This could avoid up to 3,900 premature deaths and up to 100,000 asthma attacks annually by 2030.
A final note: The Inflation Reduction Act passed without any support from Republicans. Now they are spreading lies about it in order to discredit it and Democrats before the midterm election. Heather Cox Richardson wrote, in her Letters from an American: "Republican attack ads have been telling seniors that the Democrats have made cuts to Medicare. It is technically true that costs will drop: the government should save $237 billion between 2022 and 2031 from the Inflation Reduction Act’s drug policies. But these savings come from the fact that the IRA lets the federal government negotiate with pharmaceutical companies over prices, not because it will cut the benefits seniors receive."
Sources:
“The Inflation Reduction Act Will Cut Health Care Costs for Marylanders,” White House, Aug. 18, 2022
https://www.whitehouse.gov/wp-content/uploads/2022/08/Maryland-Health-Care.pdf
“How the Inflation Reduction Act Will Reduce Health Care Costs for Seniors,” Franz Kritz, Aug. 18, 2022, VeryWellHealth
https://www.verywellhealth.com/inflation-reduction-act-reduce-medicare-costs-6500045
Letters from an American, Heather Cox Richardson, Sept. 27, 2022
https://heathercoxrichardson.substack.com/p/september-27-2022
A native of Wicomico County, George Shivers holds a doctorate from the University of Maryland and taught in the Foreign Language Dept. of Washington College for 38 years before retiring in 2007. He is also very interested in the history and culture of the Eastern Shore, African American history in particular.
Title image: Pond at Pickering Creek Audubon Center, Talbot Co. Photo: Jan Plotczyk