by Nora OBrien-Suric, PhD
President, Health Foundation for Western & Central New York
The Inflation Reduction Act (IRA), signed into law in August 2022, could be the most consequential piece of health care legislation since the Affordable Care Act (ACA) in 2010. The IRA expands access to quality, affordable health care and makes historic improvements to Medicare prescription drug coverage that will reduce out-of-pocket costs for millions of American families.
The Health Foundation for Western & Central New York advocates for affordable, accessible health care for all people, so our team is very encouraged to see some of the improvements that are coming as a result of the IRA’s passage.
Several health care provisions in the act will go into effect this year, and the new law will be implemented in phases over a period of six years.
What goes into effect this year – and how will it help?
One of the greatest barriers to accessing health care in the United States is affordability. Premiums—the costs you pay to secure health insurance coverage—are an overwhelming burden for many. A Kaiser Family Foundation report from July 2022 showed that about one-third of people with health insurance said they worried about affording their premiums.
COVID-19-related legislation helped reduce or eliminate the cost of premiums for millions of people who have ACA marketplace coverage. Those subsidies were at risk of expiring, but the IRA guaranteed they will remain in place for an additional three years, saving 13 million Americans an average of $800 per month in health care premiums.
This means that people who earn up to 150 percent of the federal poverty level (FPL) can get health care coverage under the ACA Marketplace with zero monthly premium. Those who earn up to 400 percent of the FPL will receive sliding scale subsidies to help offset the costs of health coverage premiums. However, it is important to highlight that this benefit will only be extended for three years, and again will be at risk of expiring at that time.
Starting January 1, people enrolled in a Medicare prescription drug plan will not pay more than $35 for a month’s supply of insulin. Insulin should be affordable for people of all ages who need it, but this is a huge step in the right direction that will result in a significant savings for the 196,000 New Yorkers who depend on this life-saving drug.
Also beginning on January 1, adult vaccines recommended by the Advisory Committee on Immunization Protections (ACIP) including the shingles vaccine will be available to people with Medicare Part D at no cost to them.
October 1 is the start of the first 12-month period for which drug manufacturers will be required to pay rebates to Medicare if their prices for certain Part D drugs increase faster than the rate of inflation over the 12-month period. This will go a long way toward reigning in the skyrocketing costs of prescription drugs.
What’s coming after 2023?
While it will not take effect for another two years, people with Medicare Part D won’t pay more than $2,000 out-of-pocket annually for prescription drugs and will have the option to pay out-of-pocket Part D costs in monthly amounts spread over the year. This will be welcome relief to the many people taking lifesaving drugs that cost thousands of dollars a month.
Additionally, for the first time ever, Medicare will be required to negotiate the prices of certain high-cost drugs—finally undoing the nearly 20-year ban on Medicare using its purchasing power to get a better deal for Americans. By 2029, Medicare could be negotiating the prices of as many as 60 of the costliest drugs. As a result, millions of Medicare beneficiaries could see their prescription drug costs go down.
The fight for health care for all isn’t over
The IRA’s improvements to health care affordability are necessary, important, and will have a tangible impact on the ability of Americans to access the health care they need and deserve. I applaud Congress and President Joe Biden for ensuring these provisions were included. But—we cannot stop here.
So many in our community still face the impact of systemic health inequities that lead to disparities in health outcomes. The following is from a December 2022 study from the Kaiser Family Foundation that examined recent trends in U.S. health care coverage by racial and ethnic groups:
Older American Indian and Alaska Native (AIAN) and Hispanic people had the highest uninsured rates at 21.2 percent and 19.0 percent, respectively as of 2021. Uninsured rates for nonelderly Native Hawaiian and Other Pacific Islander (NHOPI) and Black people (10.8 percent and 10.9 percent, respectively) also were higher than the rate for their White counterparts (7.2 percent).
Going forward, I hope to see our elected officials protect and strengthen these important aspects of the IRA, and then build on them to move toward a health care system where disparities are addressed and all people have access to affordable, quality care.
