After an all-night, partisan, marathon session of debate during a hot, sultry August weekend, the Senate fought off numerous amendments and passed a historic health care and climate change bill, the Inflation Reduction Act (IRA). The Senate passed the $739 billion measure along party lines, 51-50, through a budgetary process known as reconciliation, which allows legislation to pass in the Senate by simple majority vote rather than by the 60 votes usually required to overcome a filibuster. Vice President Kamala Harris cast the tiebreaking vote. The bill then passed the House by a vote of 220-207 and was sent to the president to be signed into law.
The legislation allows Medicare to negotiate some prescription drug prices for the first time and also includes the largest amount of climate change spending in history. The legislation had its origin in last year's Build Back Better Act, which stalled in the Senate after centrist Democrats did not agree with its scope and breadth. The Build Back Better Act was a larger and more comprehensive piece of legislation, addressing such things as paid family leave, maternal and mental health, improving the health care workforce, prescription drug reform, Medicaid coverage expansion, and climate change, to name a few. In the IRA, ACP supported provisions for drug pricing negotiation, extension of expiring premium tax subsidies under the Patient Protection and Affordable Care Act (ACA), and reductions in insulin spending for Medicare beneficiaries, as well as climate change reduction initiatives.
A key provision of the IRA allows the Secretary of Health and Human Services to negotiate drug prices for the first time. The negotiations will take effect for 10 drugs covered by Medicare in 2026, increasing to 15 in 2027 and then to 20 drugs in 2029 and years thereafter. For comparative purposes, the Department of Veterans Affairs has been able to buy prescription drugs at discounted prices for some time. The IRA would cap annual out-of-pocket costs to $2,000 per year for Medicare enrollees starting in 2025, with the option to break that amount into affordable monthly payments.
The legislation seeks to force drugmakers to pay rebates to the U.S. government if they ever raise Medicare prices beyond the rate of inflation. However, the inflation rebate does not apply to private health plans. Medicare beneficiaries will also be guaranteed access to free vaccines. Passage of the legislation sets the stage for Medicare to issue proposed regulations to implement the Act's provisions and to allow pharmaceutical manufacturers and others to influence their outcome.
Another key provision of the IRA caps the cost of insulin at $35 per month for Medicare beneficiaries, but not for private health plan enrollees. ACP was pleased that prices are capped for Medicare but disappointed that the Senate Parliamentarian ruled the cap to be inapplicable to private plans under the reconciliation procedures. Because of this, ACP is supportive of the bill introduced by Sens. Susan Collins (R-ME) and Jeanne Shaheen (D-NH), the Improving Needed Safeguards for Users of Lifesaving Insulin Now (INSULIN) Act, which would limit the out-of-pocket cost of insulin for patients with private insurance.
ACP is pleased that the IRA further extends the premium subsidies extended during the pandemic for three years until the end of 2025, at a cost of $64 billion, for 13 million low- and middle-class Americans who purchase coverage from state and federal exchanges under the ACA. This extension allows enrollees whose household income exceeds 400% of the federal poverty level to become eligible for subsidies and have their premium costs capped at 8.5% of income. ACP encouraged Congress to work toward making the premium subsidies permanent.
ACP fully supports efforts to reduce the harmful health effects to Americans caused by global warming and climate change, as we have supported the goals of the Paris Climate Accords. The goals of the legislative climate provisions of the IRA are twofold: Reduce our carbon footprint through clean and renewable energy, and improve energy efficiency and reduce energy consumption. The legislation seeks to decarbonize the economy and reduce greenhouse gas emissions by 40% of 2005 levels by 2030. The Biden administration had sought a 50% target reduction level.
The landmark legislation provides $369 billion of subsidies and tax credits on everything from renewable energy and electric vehicles to hydrogen hubs and carbon capture and sequestration. It includes $60 billion for growing renewable energy infrastructure in manufacturing, such as solar panels and wind turbines, and extending tax credits to individuals purchasing electric vehicles and making their homes more energy efficient.
In addition, ACP supports the inclusion of $60 billion in the IRA to address the disproportionate burden of pollution and climate change on low-income communities and communities of color. Finally, the legislation takes steps to reduce methane emissions. The IRA creates a Methane Emissions Reduction Program to reduce the leaks from the production and distribution of natural gas.
“In the Heat of the Night” was a 1960s movie and 1980s TV show that showcased the lives of those in Sparta, a small Mississippi town. It focused on the interactions of law enforcement, crime, prejudices, racial and economic equity, class, and heated debate that gave way to progress and a brighter and more inclusive future. In the heat of one night in the Senate chamber, invigorated arguments and debate over countless amendments that could have doomed the IRA were defeated or modified, paving the way for passage of a historic piece of legislation that takes a big step toward improving the future lives of millions of Americans by providing access to care and improving the quality of the air they breathe.