Inflation Reduction Act to reduce some consumer health care costs

Photo (c) the_burtons - Getty Images

Most of the savings are limited to people receiving Medicare benefits

In a rare weekend session, the U.S. Senate passed the Democrats’ package of tax and spending measures along party lines, with Vice President Kamala Harris casting the tie-breaking vote in favor of the measure. The bill now goes to the House, where Democrats say they have the votes for final approval.

In addition to provisions aimed at climate, energy, and deficit reduction, the “Inflation Reduction Act” contains provisions that affect consumers’ health care costs. 

Specifically, there is a provision allowing Medicare to negotiate the price of some drugs covered under Medicare’s Part D prescription drug plan. Negotiation is limited to a handful of very expensive drugs, such as those used to treat cancer.

The bill also caps out-of-pocket drug costs for Medicare recipients at $2,000 a year beginning in 2025. Beginning next year, all vaccines for people on Medicare would be covered.

Insulin savings limited to Medicare recipients

An original provision of the bill capped the cost of insulin at $35 for all Americans, but the Senate parliamentarian ruled that the provision could not be included in a reconciliation bill because everything in the bill must relate to the federal budget.

That provision was replaced with language that capped insulin costs at $35 for people receiving Medicare benefits. A separate bill to cap insulin costs for everyone, which required 60 votes to pass, failed even though seven Republicans joined all 50 Democrats in voting for it.

An estimated 8.4 million Americans use insulin, according to the latest data from the American Diabetes Association (ADA). Insulin was a cheap drug for most of the 20th century, but the price has more than tripled this century.

“One in every three dollars spent on drugs in the U.S. is spent on someone with diabetes, and we believe strongly that prescription drug reforms in the Inflation Reduction Act should specifically address the rising cost of insulin,” said Lisa Murdock, the ADA’s chief advocacy officer. “The ADA is grateful to Sen. Shaheen for her work to ensure people with diabetes benefit from this historic legislation.” 

ACA subsidies will continue

Finally, people who receive subsidies to help them purchase health insurance under the Affordable Care Act (ACA) will continue to receive them. The measure extends the subsidies through 2025.

As is the case with many compromises, not everyone is happy. Sen. Bernie Sanders (I-Vt.), head of the senate’s progressive wing, said the legislation did not go far enough. Senate Republican Leader Mitch McConnell (R-Ky.) said it goes too far.

In a speech during a debate on the bill, McConnell charged that the Inflation Reduction Act would actually make inflation worse and that new taxes on businesses would be passed along to consumers.

Get a health screening near you

Get Peace of Mind or Early Detection with Life Line Screening

Get started