Health Care Provisions of the Inflation Reduction Act—A Guide for Well Spouses

On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law. While its climate change provisions may have gotten more attention, IRA also impacts health care in important ways. IRA will lower prescription drug costs, especially for Medicare beneficiaries. And it will prevent out-of-pocket medical insurance premiums from skyrocketing for lower and middle-income people who rely on Federal subsidies to help them buy insurance under the Affordable Care Act.
IRA’s prescription drug provisions are detailed and complex, but here are its key points:

• For the first time, the Federal government will be required to negotiate prices for some of Medicare beneficiaries’ most heavily used drugs.
• Out-of-pocket drug costs will be capped at $2,000 per year for Medicare Part D beneficiaries.
• Out-of-pocket costs for insulin will be capped at $35 per month for Medicare beneficiaries.

IRA also requires drug companies to pay rebates to the Federal government if prices for drugs used by Medicare beneficiaries rise faster than the rate of inflation. It eliminates the 5% coinsurance for Medicare Part D catastrophic coverage. It expands eligibility for the Medicare Part D low-income premium subsidy, and eliminates cost sharing for covered adult vaccines.

Government to Negotiate Medicare Drug Prices—For the First Time
When Medicare Part D was enacted in 2003, the pharmaceutical industry won provisions prohibiting the Federal government from negotiating prices for the drugs used by Medicare beneficiaries. IRA ends this prohibition and requires the Secretary of Health and Human Services to negotiate Medicare drug prices for the first time. Drugs selected for price negotiation will be drawn from lists of drugs with the highest Medicare spending. Preparations begin in 2023, and the program takes effect in 2026, when the prices of ten of the highest-spending Medicare drugs will be based on negotiations. Fifteen more drugs will be added to this list in 2027, then 15 more in 2028, followed by 20 more in 2029.

Out-of-Pocket Drug Costs Capped for Medicare Part D Beneficiaries
Starting in 2025, IRA caps out-of-pocket drug costs at $2,000 per year for Medicare Part D enrollees. According to the Kaiser Family Foundation, 1.4 million Medicare Part D enrollees had out-of-pocket drug costs of more than $2,000 in 2020 (latest figure).

Out-of-Pocket Insulin Costs Capped
IRA caps Medicare beneficiaries’ out-of-pocket costs for insulin and insulin products at $35 per month starting in 2023. An earlier version of the bill would have extended this provision to all insulin users, not just Medicare beneficiaries—but the Senate parliamentarian ruled that this would require a super-majority of 60 votes, which doomed it given the absence of sufficient Republican votes.

Subsidies Preserved to Enable More Americans Afford Health Insurance
IRA extends for three years through 2025 the enhanced subsidies that have enabled millions to purchase medical insurance under the Affordable Care Act. These enhanced subsidies help many low-income families while also extending eligibility for help to many middle-income households.

… But Nothing for Home Care
While IRA’s provisions are important for many Well Spouses, progress on health care and especially long-term care remains an unfinished agenda. To take just one example, IRA provides no new funding for Medicaid home care, despite the best efforts of the Well Spouse Association and many allied organizations and individuals.
Home care is so under-funded that more than 800,000 people who meet Medicaid’s stringent eligibility requirements are on waiting lists to receive long-term care at home. This places a huge unfair burden on families and forces many people into nursing homes. So please thank your Senators and your Representative if they voted for IRA—but please also let them know that much more legislative work remains to be done.

For more information on the health care provisions of the Inflation Reduction Act, visit the Kaiser Family Foundation web site: .