The Inflation Reduction Act & Healthcare for Older Adults
Medicare will negotiate prices on certain medications and other price controls
The Inflation Reduction Act of 2022 was passed Sunday after an all-night, marathon session, with a 51 to 50 vote with a tie-breaking vote by Vice President Kamala Harris. It was passed as a budget reconciliation bill: a special parliamentary procedure to expedite the passage of certain budgetary legislation. This reconciliation procedure overrides the filibuster rules in the Senate, which normally require a 60-vote supermajority.
It includes enabling Medicare to negotiate the price of some prescription drugs, and to cap out-of-pocket expenses at $2,000 annually beginning in 2025 for the 1.4 million Medicare beneficiaries who pay that much or more per year , as well as forcing drug companies to pay a rebate if they increase prices faster than the rate of inflation in Medicare. An attempt by the Democrats to apply these rebates for the privately insured was not allowed under the rules of the reconciliation procedure.
Starting next year, the approximately 64 million in Medicare will receive free vaccines, and a cap on insulin costs at $35 a month. (A proposal to apply this cap to privately insured patients was rejected by Republican Senators.)
According to the Kaiser Family Foundation, “The bill also would extend for three years the enhanced Affordable Care Act subsidies that Congress passed last year as part of the American Rescue Plan Act.”
The Inflation Reduction Act also addresses climate change, increases the Internal Revenue Service budget, and raises taxes on some billion-dollar corporations to reduce the federal deficit.
While this $739 billion bill is seen as a major victory for the Biden administration that struggled and lost Senate approval of the multi-trillion dollar Build Back Better bill, when Sen. Joe Manchin (Dem, WV) withdrew his support, conservative commentators take a negative view of the plan to reduce drug prices.
Yesterday, the Wall Street Journal ran the opinion piece “Democrats Vote to Raise Drug Prices,” claiming that this would “raise drug costs and health premiums for 220 million privately insured Americans.”
Their rationale is that drug makers having to provide Medicare with steep discounts will compensate by increasing prices in the commercial market. “Another result will be higher employer health costs and thus lower worker take-home pay. Nice going, Democrats.”
The New York Times’ “Democrats’ Long-Sought Plan for Lowering Drug Costs Is at Hand” describes the history of this effort and the minimal impact on the pharmaceutical industry with this new bill.
Thus, we have the cheerleaders, naysayers and an unpopularly polling President caught up in these inflationary, and some would say existentially, challenging times.
As the House will certainly pass this legislation, I’ll do a deep dive on the specifics as the analyses continue.