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Inflation Reduction Act: 3 Ways It Can Save You Money on Medical Bills

The Inflation Reduction Act is scheduled to be signed into law by President Joe Biden on Tuesday. After passing the Senate last weekend, the sweeping health care, climate and tax reform bill cleared the Democrat-controlled House of Representatives on a 220-to-207 vote on Friday.

On the health care front, the 755-page legislation will extend expiring subsidies for Affordable Care Act health insurance and give Medicare the power to negotiate prescription drug prices. 

It’s a major win for the Biden administration and, following the signing, the president will host a cabinet meeting focused on implementing it. He’ll also travel across the US to highlight how the Inflation Reduction Act will help the American people. 

How can the Inflation Reduction Act save you money on your health care costs? Read on to find out. 

For more on health care, learn how to save on medical bills when you don’t have insurance, the best telemedicine services for at-home doctor’s visits and how to enroll in the healthcare marketplace under the Affordable Care Act.

1. Allow Medicare to negotiate prescription drug prices

To address the cost of prescription drugs, the bill would let Medicare annually negotiate prices with pharmaceutical companies on 10 pricey medications, starting in 2026.

Fifteen more high-cost and high-use drugs would be added the following year, another 15 in 2028, and 20 more drugs would make the list in 2029.  

“Currently, our drug pricing system works for corporations and middlemen, not patients,” Senate Democrats said in an Aug. 7 statement. “The new negotiation policy will ensure that patients with Medicare get the best deal possible on high-priced drugs and pay cost-sharing for those drugs based on the Medicare negotiated price.”

The $740 billion bill includes $288 billion for prescription drug pricing reform for the more than 63 million seniors and others who use Medicare.

It also closes a “rogue Secretary” loophole that could have allowed a future administration to refuse to try to get the best prices for medications, according to Senate Democrats, “or negotiate fewer than the maximum number of drugs.”

Prescription costs would be capped at $2,000 a year for seniors on Medicare Part D drug plans.


Jose Luis Pelaez/Getty Images

2. Cap annual drug costs for Medicare Part D enrollees

In addition to negotiated drug prices, the bill would cap out-of-pocket prescription drug costs at $2,000, starting in 2025, for those with Medicare Part D drug plans. It also adds an option to break that cap into monthly payments. 

“This is a huge policy change and one that has been a long time coming,” said Dr. Stacie Dusetzina, a professor of health policy at Vanderbilt University, told The New York Times. “For people needing high-cost drugs, this will provide significant financial relief.”

The bill would also cover vaccines and sets a $35 cap on insulin for Medicare recipients, starting in 2023.

Read on: How the Inflation Reduction Act Will Fight Climate Change

3. Subsidize health insurance bought on the Affordable Care Act marketplace

Notably, the bill enhances and extends subsidies to private health insurance bought through the public marketplace that were introduced in 2020 under the American Rescue Plan Act. 

Before then, the assistance was generally available only to households with income from 100% to 400% of the poverty level. Now that income cap will be (temporarily) lifted, so no one pays a premium that’s more than 8.5% of their income.

In 2022, nearly 13 million of the 14.5 million Americans buying health care on the marketplace were receiving subsidies, saving an average of $800 a year, according to the White House. 

In the 33 states that use HealthCare.gov, the federal insurance exchange site, premiums would be 53% higher on average this year if not for the extra ARPA subsidies, according to the Kaiser Family Foundation.

The same would be true in states operating their own exchanges, the foundation said.

What health care benefits does the Inflation Reduction Act leave out?

Senate Democrats didn’t get everything they wanted: The prescription drug provisions were weakened after Senate Parliamentarian Elizabeth MacDonough ruled that efforts to limit price increases on drugs to inflation rates went against the reconciliation process being used to pass the bill with a simple majority, The Washington Post reported.

It also isn’t clear yet which prescriptions the Secretary of Health and Human Services will be able to negotiate on.

“The battle over which therapies should be chosen will also be a regulatory lobbying frenzy,” Stat reported, “and drugmakers have until 2026 to bend the policy to their will.”

And while an insulin price cap for Medicare users cleared the Senate, Republicans stripped one for people with private insurance.

What have been criticisms of the Inflation Reduction Act’s health care provisions? 

A group of Republican physicians in Congress say they’re “deeply concerned” about the prescription drug caps in the Senate bill.

In a letter Monday to Senate Majority Leader Charles Schumer and House Speaker Nancy Pelosi, the GOP Doctors Caucus wrote that pricing controls could limit resources, stymie research and cause a significant drop in provider reimbursement.

Read more: How Mark Cuban’s Cost Plus Drugs Program Can Save You Hundreds on Prescriptions

Warning that “government price controls have consequences,” the caucus called for a bipartisan plan to lower drug costs “without sacrificing the cures and treatments that will provide for a healthier future.”

The letter was signed by Republican lawmakers including Sens. Bill Cassidy of Louisiana, a hepatologist; John Barrasso of Wyoming, a former orthopedic surgeon; and Rand Paul of Kentucky, a former ophthalmologist; as well as Reps. Scott DesJarlais of Tennessee, a general practitioner; Andy Harris of Maryland, an anesthesiologist; and Mariannette Miller-Meeks of Iowa, a former ophthalmologist. 

The Pharmaceutical Research and Manufacturers of America (PhRMA), a leading pharmaceutical lobbying group, also opposes the plan, saying it would allow the government to set prices, not just negotiate them.   

The provisions in the Inflation Reduction Act also “threaten patient access and future innovations,” PhRMA spokesperson Debra DeShong said in a statement.

What’s next for the Inflation Reduction Act?

Having passed the House and Senate, the bill now moves to the White House and Biden, who’s already supported the measure, for signing.

“I ran for President promising to make government work for working families again, and that is what this bill does — period,” Biden said in a statement Sunday.

The information contained in this article is for educational and informational purposes only and is not intended as health or medical advice. Always consult a physician or other qualified health provider regarding any questions you may have about a medical condition or health objectives.



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