The U.S. Senate is on the verge of passing one of the biggest healthcare and energy bills in a generation after over a year of failed talks and negotiations. The bill known as the Inflation Reduction Act of 2022 is designed to reduce costs for families and consumers.
If it passes, it will allow Medicare to negotiate the prices of certain medications, and it would cap out-of-pocket costs at $2,000 for those enrolled in Medicare drug plans. It would also extend expiring enhanced subsidies for Affordable Care Act coverage for three years. The bill would also inject $369 billion into energy and climate change programs, with the goal of reducing carbon emissions by 40% by 2030.
Reducing Prescription Drug Prices
Giving Medicare the power to negotiate the price of drugs administered at the doctor’s office and in pharmacies should reduce the cost of medication for most patients. The Department of Health and Human Services would negotiate the prices of 10 drugs in 2026, and another 15 drugs in 2027 and again in 2028. The number would rise to 20 drugs a year for 2029 and beyond.
The bill also makes changes to Medicare’s Part D drug plans. Seniors and people with disabilities wouldn’t pay more than $2,000 a year for medication bought at the pharmacy. The bill will also require drug companies to pay rebates if they increase their prices in the Medicare and private-insurance markets faster than inflation.
According to the Congressional Budget Office (CBO), the prescription drug provision of the bill will reduce the national deficit by $288 billion over the next ten years.
Extending ACA Subsidies
The bill also extends the added subsidies for the Affordable Care Act, which were temporarily increased during the COVID-19 pandemic. The original version of the bill would’ve only extended the increased subsidies for two years, but they will now last until 2025. The extra spending has already led to record enrollment, bringing the number of uninsured Americans down to a record low of 8%.
Enrollees pay no more than 8.5% of their income toward coverage, down from nearly 10%. And lower-income policyholders receive subsidies that eliminate their premiums completely. Also, those earning more than 400% of the federal poverty level have become eligible for help for the first time.
Extending the enhanced subsidies would cost $64 billion over a decade, according to the CBO.
West Virginia Senator Joe Manchin recently endorsed the bill, which all but assures its passage in the Senate.
“Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination,” Manchin told reporters.
If it passes the Senate, the bill will then go back to the House before making its way to the President. It could be law in just a matter of weeks.