What the Inflation Reduction Act means for health care

What the Inflation Reduction Act means for health care

Photo: Michael Duva/Getty Images

In a 51-50 vote with Vice President Kamala Harris as the tiebreaker, the Senate on Saturday approved the Inflation Reduction Act that includes much of the Democrats’ desired drug deal priorities and continued subsidies from the ‘affordable care.

The bill now heads to the House, where it is expected to pass and then head to President Joe Biden’s desk for his signature.

Here’s what’s in the health care bill.

The big one: Medicare will be able to negotiate drug prices for the first time for 10 yet-to-be-determined high-cost drugs starting in 2026.

The Pharmaceutical Research and Manufacturers of America (PhRMA) has opposed this provision since President Joe Biden introduced it in 2021.

PhRMA CEO Stephen J. Ubl said in a statement: “They say they’re fighting inflation, but data from the Biden administration shows that prescription drugs aren’t fueling inflation. They say this is ‘negotiation,’ but the bill gives the government unchecked authority to set drug prices. And they say the bill won’t hurt innovation, but several experts, biotech investors and patient advocates agree that this bill law will result in fewer new cures and treatments for patients struggling with cancer, Alzheimer’s and other diseases.

“Under the bill, patients will still pay more for drugs than their insurance company pays,” Ubl continued.

Sen. Ron Wyden, chairman of the Senate Finance Committee, said in a statement: “Medicare bargaining is the centerpiece of the drug price reforms of the Inflation Reduction Act. Drug companies will no longer be able put Medicare on hold for years or even decades while taxpayers pick up the slack. This policy targets the most expensive and widely used drugs that have had zero competition for years.”

The bill prevents Medicare drug prices from rising faster than inflation.

Starting in 2025, Medicare beneficiaries receive a $2,000 annual limit on out-of-pocket drug costs.

Those with Medicare for insurance receive a monthly limit of $35 for insulin, but this does not apply to those with private insurance. Republicans voted to eliminate a provision of the Inflation Reduction Act that would have created a $35 monthly copay cap for insulin for Americans with private insurance.

It also offers free vaccines to Medicare recipients starting in 2023.

Another big win for Democrats: A three-year extension of Affordable Care Act subsidies that lowered or eliminated premiums for many ACA consumers.

The Senate voted to extend the health insurance subsidy improvements of the American Rescue Plan until 2025, preventing them from expiring at the end of this year.


There’s a lot in the bill to please Medicare recipients as well as people who get insurance through the Affordable Care Act.

Dr. Bruce Siegel, president and CEO of America’s Essential Hospitals, said, “While we applaud the bill’s support for affordable care, we are disappointed that it lacks funding for the hospital workforce and infrastructure needs. Essential hospitals face persistent staff shortages, high labor costs, and infrastructure constraints. They need more funding from Congress to address these challenges as the impacts of the pandemic continue.”

Center for Medicare Rights President Fred Riccardi said, “Critically, it will lower costs for people with Medicare in a number of ways. It will also begin to address the drivers of those costs through key structural reforms to Medicare, such as require Medicare to negotiate drug prices, penalize manufacturers for price increases that exceed inflation, and to better align Part D’s price incentives.”

Louise Norris, health policy analyst at healthinsurance.org, said: “Without action from Congress, millions of people are likely to see their subsidies decrease or disappear by 2023, and 3 million current enrollees could lose their full coverage”.

Chiquita Brooks-LaSure, administrator of the Centers for Medicare and Medicaid Services, issued the following statement: “This bill will expand enhanced federal tax credits to save millions of people an average of $800 a year in health insurance premiums in the Affordable Care Act’s marketplaces. and cap the amount of money people with Medicare Part D pay out-of-pocket for prescription drugs at $2,000 a year. And, after years of debate since it was passed Part D, Medicare will finally have the ability to negotiate the price of prescription drugs to help seniors, people with disabilities and taxpayers pay less.”

Matt Eyles, President and CEO of AHIP, said, “All Americans deserve to have access to affordable coverage and high-quality care, and the Senate’s action will continue the life support that millions of families working Americans need to buy their own health coverage for years to come.”

Lauren Aronson, executive director of the Campaign for Sustainable Rx Pricing (CSRxP), said, “This legislation reflects several CSRxP priorities that have previously won bipartisan support, including solutions to keep Big Pharma’s price increases below of the rate of inflation, provide relief to America’s elderly by limiting their out-of-pocket drug costs and hold the pharmaceutical industry accountable for outrageous pricing practices and anti-competitive tactics designed to undermine more affordable alternatives and maintain high prices”.


The legislation was negotiated in secret by Majority Leader Chuck Schumer and moderate Democratic Sen. Joe Manchin of West Virginia, giving life to Biden’s nearly-dead Build Back Better plan.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org


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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!