Inflation Reduction Act 1-Year Anniversary

August 10, 2023

Last August, the Biden Administration passed the Inflation Reduction Act (IRA), a wide-reaching piece of legislation that ushered in sweeping changes to everything from climate and industrial policy to healthcare. The Inflation Reduction Act introduced a number of policies lowering healthcare costs and expanding access. As the law has begun to take effect over the past year, how has the IRA has improved healthcare for Americans?

Lieutenant Governor Antonio Delgado speaks at Protect Our Care tour in Kingston, N.Y. stop to tout efforts to lower health costs on Tuesday, August 1, 2023


Saving Americans Money on Health Insurance

Americans have had to absorb higher health insurance premiums at a time of high inflation. Thankfully, the American Rescue Plan extended federal subsidies to families who purchase coverage under the Affordable Care Act insurance plans. Those savings were set to expire in 2022, but thanks to the Inflation Reduction Act, that didn’t happen. The Inflation Reduction Act:

  • Extended savings and lower costs through 2025, with an overall goal to reduce healthcare costs to 8.5% or less of a family’s household income
  • Saved 14.5 million Americans an average of $2,400 per family on their health insurance premiums Eliminated cost sharing for approved adult vaccines for those covered by Medicaid and Children’s Health Insurance Program (CHIP) beginning October 1, 2023
  • Eliminated healthcare premiums for workers with incomes at or below 150% of the federal poverty level

Improving Medicare for Seniors

Roughly 50 million Americans are covered by Medicare Part D, a program that helps cover the costs of prescription drugs for seniors and disabled people. Many with coverage are on fixed incomes and are extremely sensitive to price fluctuations brought about by inflation. Here’s how the Inflation Reduction Act benefits them:

The low income subsidy program (LIBS), which helps people with Medicare pay for prescription drugs, will be extended starting in 2024

Giving Medicare the Ability to Negotiate Drug Prices 

Life-saving medications are often far out of reach for many Americans, and their costs have long been a source of despair amongst many.  To combat this, the Inflation Reduction Act law will allow Medicare to negotiate directly with drugmakers to reduce costs of lifesaving treatments. Beginning on September 1, 2023 Medicare will announce their top 10 drug targets for negotiation, which is expected to include many of the most popular treatments such as brand name blood thinners, diabetes, and cancer medications. The Congressional Budget Office estimates Medicare negotiation will result in a 50% reduction in net prices for negotiated drugs.

Health care advocate Deborah Scarborough speaks at Protect Our Care tour to tout efforts of lower health costs stops in Kingston, N.Y. Tuesday, August 1, 2023. The event was held a the Academy Green in Kingston. (Tania Barricklo/Daily Freeman)

More To Come

In addition to all of the changes already in process, the Inflation Reduction Act will also bring on future benefits to Medicare including:

  • Prescription drug inflation rebates, which will require manufacturers to pay rebates to Medicare if the prices of covered drugs rise faster than the rate of inflation
  • 49 million Medicare Part D beneficiaries will have out-of-pocket costs for prescription drugs capped at $2,000 per year starting in 2025
  • Medicare will negotiate lower prices for 80 of the most expensive and popular prescription drugs by 2030

What’s Next?

As The White House continues to work towards driving down inflation, controlling healthcare related costs will be critical. One year in, the healthcare benefits of the Inflation Reduction Act are just starting to take effect with some immediate benefits to seniors and families. To learn more about what comes next, including further drug price negotiations extended vaccine coverage and benefits to low-income enrollees check out this implementation timeline.