What the Inflation Reduction Act means for healthcare

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In a 51-50 vote with Vice President Kamala Harris as the tie-breaker, the Senate on Saturday passed the Inflation Reduction Act that includes much of the sought-after Democratic priorities on drug negotiations and continued Affordable Care Act subsidies.

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

Here's what in the bill for healthcare.

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

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

PhRMA CEO Stephen J. Ubl said by statement, "They say they're fighting inflation, but the Biden administration's own data show that prescription medicines are not fueling inflation. They say this is 'negotiation,' but the bill gives the government unchecked authority to set the price of medicines. And they say the bill won't harm innovation, but various experts, biotech investors and patient advocates agree that this bill will lead to fewer new cures and treatments for patients battling cancer, Alzheimer's and other diseases.
 
"Under the bill, patients will still pay more for medicine than their insurance company pays," Ubl continued. 

Senator Ron Wyden, chairman of the Senate Finance Committee, said by statement: "Medicare negotiation is the centerpiece of the Inflation Reduction Act's drug pricing reforms. No longer will drug companies be able to string Medicare along for years or even decades while taxpayers foot the bill. This policy targets the most expensive, most used drugs that have had zero competition for years on end."

The bill keeps drug prices in Medicare from rising faster than inflation.

Starting in 2025, Medicare beneficiaries get a $2,000 annual cap on out-of-pocket drug expenses.

Those who have Medicare for insurance get a $35 monthly cap on insulin, but this does not apply for those with private insurance. Republicans voted to remove a provision from the Inflation Reduction Act that would have created a $35 monthly copay cap for insulin for Americans with private insurance.

It also gives Medicare recipients free vaccines 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 American Rescue Plan's health insurance subsidy enhancements through 2025, preventing them from expiring at the end of this year. 

WHY THIS MATTERS: REACTION

There's a lot in the bill for Medicare recipients to like and also for people who get insurance through the Affordable Care Act.

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

Medicare Rights Center President Fred Riccardi said, "Critically, it will lower costs for people with Medicare in several ways. It will also begin to address the drivers of those costs through key Medicare structural reforms, such as requiring Medicare to negotiate drug prices, penalizing manufacturers for price hikes that outpace inflation, and better aligning Part D pricing incentives."

Louise Norris, health policy analyst for healthinsurance.org, said, "Without action from Congress, millions of people will likely see their subsidies decrease or disappear in 2023, and 3 million current enrollees might lose their coverage altogether."

Chiquita Brooks-LaSure, administrator of the Centers for Medicare and Medicaid Services, issued the following statement: "This bill will extend enhanced federal tax credits to save millions of people an average of $800 a year on health insurance premiums on the Affordable Care Act Marketplaces and limit 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 Part D was passed, 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: "Every American deserves access to affordable coverage and high-quality care, and the Senate's action will continue vital support that millions of hardworking American families need to purchase their own health coverage in the years to come."

The Campaign for Sustainable Rx Pricing (CSRxP) Executive Director Lauren Aronson said, "This legislation reflects several CSRxP priorities that have previously won bipartisan support, including solutions to keep Big Pharma's price hikes below the rate of inflation, deliver relief for America's seniors by capping their out-of-pocket drug costs, and hold the pharmaceutical industry accountable for egregious pricing practices and anti-competitive tactics designed to undermine more affordable alternatives and keep prices high."

THE LARGER TREND

The legislation was secretly brokered by Majority Leader Chuck Schumer and moderate Democratic Sen. Joe Manchin of West Virginia, giving life to Biden's all-but-dead Build Back Better plan.

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