How the Inflation Reduction Act Might Affect Your Health Care

How the Inflation Reduction Act Could Lower Your Drug Costs | TimeSource: The Washington Post, by Rachel Roubein

Congressional Democrats are on the verge of passing their most significant health-care legislation in more than a decade, delivering a major victory to President Biden, who has made tackling the high price of care a key plank of his domestic agenda.

If signed into law, the party’s long-stalled economic package would prevent huge spikes in the cost of health insurance for roughly 13 million Americans. It would limit seniors’ drugs costs at $2,000 a year. And it would place a cap of $35 a month on how much diabetics enrolled in Medicare would pay for insulin, a lifesaving medication.

After more than a year of fraught negotiations, the economic package won the support of all Senate Democrats on Sunday, and heads to the House, where it’s expected to advance this week. The bill doesn’t make changes to the health-care system as sweeping as the party originally envisioned, and some policies will take years to be implemented. But, three months before the midterm elections, Democrats are already gearing up to tout the measures on the campaign trail.

“There’s a whole range of things that are really game-changing for ordinary folks. Now, some of it is not going to kick in for a little bit, but it’s all good,” Biden told reporters Monday. “When you sit down at that kitchen table at the end of the month, you’re going to be able to pay a whole hell of a lot more bills because you’re paying less in medical bills.”

Will Americans pay less for drugs?

There are several key parts to that question. The first involves Medicare being able to negotiate the price of drugs.


It isn’t clear yet how robust the savings for seniors will be because of Medicare’s ability to negotiate prices. But health experts believe there will be lower costs.


Allowing drug negotiation in Medicare — the federal health insurance program for older Americans and those with disabilities — has long been backed by Democrats, who believe it will help make medicines more affordable. But the pharmaceutical industry’s multimillion dollar lobbying machine has blasted that notion and fought tooth-and-nail against the proposal.

The provisions included in Democrats’ health and climate bill are smaller in scale than many in the party wanted, meaning the impact won’t be as far-reaching. The government would begin negotiating the price of 10 drugs by 2026, with that number growing to up to 20 drugs by 2029.

But the number of Americans with Medicare coverage who will see lower out-of-pocket costs on drugs — and how much will they save — will depend on which drugs are subject to negotiations and the price reductions the government secures, according to the Kaiser Family Foundation.


“It’s difficult to say with certainty which drugs will be negotiated or what the level of savings will be for patients who take those drugs,” said Tricia Neuman, a senior vice president at the Kaiser Family Foundation. “But for patients who do take those drugs, there will be savings that come into being starting in 2026.”

As for annual out-of-pocket costs for medicines, the legislation passed Sunday caps costs at $2,000 per year for Medicare beneficiaries. Roughly 1.4 million enrollees in the program’s voluntary prescription drug benefit spent $2,000 or more in 2020 on medications. But it’s likely that even more seniors will save money as a result of the new limit on drug costs, because the estimate from the Kaiser Family Foundation didn’t account for expected hikes in average annual out-of-pocket costs in more recent and in future years.

Older adults who take pricey medications for conditions such as cancer or multiple sclerosis are especially likely to benefit. For instance, some on Medicare with the diseases spent between $4,100 and $6,200 a year to manage the disease.

Democrats had sought to impose a $35 monthly price cap on the cost of insulin for patients on Medicare and those with private health plans.

But Republican lawmakers blocked the part of the policy that would have extended the cap to millions of Americans with private insurance who use the drug, which diabetics use to manage blood sugar levels. The measure will still benefit Americans who have Medicare coverage.

The number of Americans with Medicare using insulin doubled from 1.6 million in 2007 to 3.3 million people in 2020. Many seniors spend an average of $54 per prescription across all insulin products, which means Democrats’ cap will lower costs.

Does the legislation lower health insurance costs? And if so, for whom?

The spending package includes a three-year extension of enhanced financial aid for roughly 13 million Americans who buy health coverage through the Affordable Care Act’s exchanges.


Last year, Democrats passed the beefed up tax credits in their coronavirus aid bill, but such subsidies are slated to expire at the end of this year. The economic package poised for final passage this week extends the aid through 2025.

Without that assistance, health-care costs would spike substantially. Roughly 3 million people who receive health coverage through the ACA’s insurance exchanges could be priced out of the market and potentially become uninsured. Nearly 9 million people could lose hundreds of dollars in financial help per year if the assistance wasn’t extended, and an estimated 1.5 million may have lost their tax credits entirely, though remain insured, according to a March report from the Department of Health and Human Services.

Who won’t benefit from the legislation?

Under the ACA, states were required to expand Medicaid to people earning up to 133 percent of the federal poverty level. But the Supreme Court made doing so optional for states, and Republican officials in a dozen states have refused to expand the program.

Previous versions of the bill had crafted a federal solution, circumventing recalcitrant GOP officials and expanding safety net coverage to roughly 2.2 million low-income adults. But the legislation the Senate passed Sunday excluded that provision.

The legislation also excluded provisions aimed at new mothers and vulnerable children. The policies left out of the Senate’s bill would have permanently funded coverage for low-income children and expanded Medicaid benefits in all states to new mothers for a year after giving birth.

Democrats Face Tough Messaging War on Prescription Drug Bill

Democrats vent their fury as Joe Manchin shelves action on climate changeSource: Bloomberg, by Alex Ruoff and Zach C. Cohen

Democrats want to go into their August recess telling their constituents they’re lowering what they pay for medicines — but many of their promised changes won’t be felt for years, and only by a fraction of the nation.

Drug-pricing legislation is expected to get a vote in the Senate as soon as this week as part of a larger domestic policy package. The pharmaceutical industry, conservative groups, and Republican lawmakers are already bashing the measure in television ads and in town halls, painting it as ineffective and harmful to drug innovation.

This messaging war could be challenging for Democrats because some of the major benefits of their drug-pricing bill won’t go into effect until 2025, too late for voters in elections this November. Opponents of the drug bill say they’ll try to capitalize on that.

“The administration knows none of this is going to help benefit people anywhere around the country, nobody this year,” said John Barrasso(R-Wyo.), a physician who’s chairman of Senate Republicans’ messaging operation.

The party of the president tends to lose seats during midterm elections, and this November is shaping up to repeat that precedent. President Joe Biden has a low approval rating and Americans report increasing dissatisfaction with the direction of the country and the economy.

The legislation is the culmination of more than a decade of work by Democrats to make good on their promise to reduce prescription drug prices in the US by allowing the government to negotiate with drugmakers.

Democratic leaders say they’ve got the backing of influential groups such as the AARP, who can help spread their message about coming benefits — namely a $2,000 out-of-pocket cap on what seniors pay each year for medicines.

“Of course it will take time to phase out, and of course the opposition will try to cause problems in the meantime, that’s just the nature of it,” said Sen. Debbie Stabenow (D-Mich.), head of the Democratic Policy and Communications Committee. “We just have to tell the story, and work with AARP and everyone else to tell the story of what we’ve done, and explain that relief is coming and it will come as fast as possible.”

Democrats also face concerns within their own party that the drug-pricing bill doesn’t go far enough because it would limit drug negotiations to only a set number of medicines that’ve been on the market for years. Sen. Bernie Sanders (I-Vt.), who caucuses with Democrats, said limiting negotiations is a mistake, and Americans want a more forceful effort to lower drug prices.

“This is a weak bill, which goes nowhere near as far as I think the American people want us to go,” Sanders said.

Attack Ads

Democrats seen as swing votes or who have difficult reelection bids already face attack ads around their drug-pricing bill. Outside groups have spent more than $8.2 million on broadcast ads lambasting the drug-pricing provision since it was unveiled in July, data from media tracker AdImpact show.

The dark-money group American Prosperity Alliance has spent $5.7 million and counting on ads in West Virginia, Georgia, Nevada, and Washington, D.C. The spots falsely claim that this legislation would strip Medicare of $300 billion, misinterpreting projections that the legislation would lower Medicare spending by $288 billion over 10 years.

Sen. Catherine Cortez Masto (D-Nev.), who is up for reelection this November, said last week “hundreds” of Nevadans called her office worried about the policy. “In Reno this past weekend, Nevadans came up to me because they were concerned about these false accusations,” Cortez Masto said on the Senate floor.

The Partnership to Fight Chronic Disease, a political tax-exempt group, has spent more than $1.1 million on ads in West VirginiaGeorgiaNevada, and Washington, D.C., urging key senators not to “mess with” Medicare. And PhRMA, the trade association for pharmaceutical companies, is spending more than $1 million across the country warning “government price-setting could mean fewer medicines in the coming years.”

Supporters of the proposal are outgunned, spending millions of dollars less in the same timeframe on broadcast advertising to celebrate the provisions. Some of this funding comes out of the pockets of Democrats who are on the ballot in November.

AARP is spending $436,000 on ads in Washington, D.C., and West Virginia applauding the plan for “putting money back” in voters’ pockets. Majority Forward, a political nonprofit with ties to Democratic Senate leadership, spent $310,000 thanking Sen. Maggie Hassan (D-N.H.) for her support for the domestic policy measure.

Sens. Chris Van Hollen (D-Md.) and Richard Blumenthal(D-Conn.), who are up for reelection, have both spent thousands of dollars running ads touting their work to cut drug costs.

Pre-Recess Messaging

Democrats will likely keep up that drumbeat over the August recess. House Speaker Nancy Pelosi(D-Calif.) wrote to colleagues last week, encouraging members of her caucus to highlight work to “lower costs,” and the Democratic Congressional Campaign Committee in a pre-recess memo warned a Republican majority would “protect Big Pharma profits over people’s lives.”

House Republican leaders last week distributed communications kits—pamphlets meant to give lawmakers talking points while at home in their districts—that decry a a “Democrat Socialist drug takeover could lead to 135 fewer drugs and cures.”

Rep. Brad Wenstrup (R-Ohio), a physician, said Democrats’ bill would “limit production” and would be a “crushing blow to research and development in the pharmaceutical industry.”

“To me, one lost cure is too many,” Wenstrup said. “And one of the worst parts about this bill: if you’re someone, like most Americans, that pays into Medicare your whole life, this bill is robbing Medicare to go ahead and pay for insurance premiums.”

Both sides of this messaging fight are a bit divorced from the reality of the drug-pricing bill, said Spencer Perlman, director of health-care research for the consultancy Veda Partners.

The Senate drug-pricing bill is the “second-best possible outcome” for the pharmaceutical industry behind no congressional action, Perlman said. It’s weaker than what Democrats have proposed in the past and likely means Congress won’t return to drug pricing for years to come, he said. Meanwhile, drug spending will continue to grow over the next decade, and Democrats’ bill is expected to slow that growth rate by about 15% for Medicare and 12% for the commercial market, Perlman wrote in a recent analysis.

Significant Changes

Democrats are trying to advance one of the most significant changes to Medicare’s drug benefit since it was started in 2006. Some of them will be more apparent than others, researchers who study the program say.

In addition to the out-of-pocket cap, the bill would allow seniors in Medicare to spread out their drug costs over the year, and in 2023 Medicare beneficiaries would have no cost-sharing for adult vaccines, said Tricia Neuman, who heads the Kaiser Family Foundation’s research on Medicare.

In 2024, the bill would also eliminate the 5% coinsurance beneficiaries pay when they hit what’s known as a catastrophic threshold, which was more than $7,000 in out-of-pocket drug spending in 2022, she said. This will help people who take brand-name drugs costing thousands of dollars afford their pricey medicines, she said.

More than 1.3 million Medicare beneficiaries hit the catastrophic threshold for drug spending, and more than 1.4 million beneficiaries spent more than $2,000 on medicines in 2020, Neuman said. But that’s just a fraction of about 48 million enrollees in Medicare’s drug benefit.

“It’s a terrible program for people who need expensive, life-saving drugs,” said Stacie Dusetzina, an associate professor in the Department of Health Policy at Vanderbilt, with some seniors not filling their prescription for crucial medicines because of the cost. Dusetzina was part of an April study that found almost a third of people on Medicare weren’t filling anti-cancer drugs.

Dusetzina, who studies Medicare and drug policy, said the drug bill is a big step forward for Medicare.

“Even if they don’t fully get the public to understand the nature of these changes and why they’re so important, it’s still important to do them because the program is broken and needs to be fixed,” she said.

Dems Want To Tax High Earners To Protect Medicare Solvency

Dems want to tax high earners to protect Medicare solvency | The Seattle  Times

Source: Associated Press, by Alan Fram

Senate Democrats want to boost taxes on some high earners and use the money to extend the solvency of Medicare, the latest step in the party’s election-year attempt to craft a scaled-back version of the economic package that collapsed last year, Democratic aides told The Associated Press.

Democrats expect to submit legislative language on their Medicare plan to the Senate’s parliamentarian in the next few days, the aides said. It was yet another sign that Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., could be edging toward a compromise the party hopes to push through Congress this summer over solid Republican opposition. Manchin scuttled last year’s bill.

Under the latest proposal, people earning more than $400,000 a year and couples making more than $500,000 would have to pay a 3.8% tax on their earnings from tax-advantaged businesses called pass throughs. Until now, many of them have been using a loophole to avoid paying that levy.

That would raise an estimated $203 billion over a decade, which Democrats say would be used to delay until 2031 a shortfall in the Medicare trust fund that pays for hospital care. That fund is currently projected to start running out of money in 2028, three years earlier.

Most U.S. businesses are pass throughs, which include partnerships and sole proprietorships and range from one-person law practices to some large companies. Owners count the profits as income when they pay individual income taxes, but such companies do not pay corporate taxes — meaning they avoid paying two levels of taxation.

Democrats this week also sent the parliamentarian a separate 190-page piece of the emerging Schumer-Manchin compromise aimed at lowering prescription drug costs for patients and the government. Provisions include requiring Medicare to negotiate drug prices, limiting beneficiaries’ out-of-pocket costs to $2,000 annually and increasing federal subsidies for copays and premiums for some low-income people.

With November elections for control of Congress approaching, Democrats hope the two proposals will be a remedy for a campaign season that so far looks bleak. Republicans are favored to win a majority in the House and could do the same in the Senate.

Democrats say both plans will show voters they are battling to curb health care costs and protect the widely popular Medicare program, positions they say will be dangerous for Republicans to oppose. Polls show widespread public alarm over recent months’ historically high inflation ratessupply chain problems and other economic issues that along with President Joe Biden’s dismal popularity ratings are pushing voters Republicans’ way, the GOP says.

Asked for comment, a spokesperson for Senate Minority Leader Mitch McConnell noted that the Kentucky Republican told constituents this week that Democrats would make inflation “considerably worse” by reviving their economic bill.

“From an economic point of view, I can’t think of anything they haven’t screwed up,” McConnell said.

Schumer and Manchin have been bargaining privately for weeks on a package aides say could include around $500 billion in spending and tax credits, more than paid for with about $1 trillion in revenue and other savings. Schumer has described the talks as productive but acknowledged that some issues remain unresolved.

Energy and environment programs, corporate taxes, IRS budget increases to strengthen tax enforcement and a renewal of soon-to-expire federal subsidies for people buying health insurance under President Barack Obama’s health care law are also under discussion, aides say.

It remains uncertain what will emerge from the talks. The aides described the latest proposals and status of negotiations only on condition of anonymity because they were not authorized to disclose the information by name.

The suggestions of progress were emerging seven months after Manchin derailed a roughly $2 trillion, 10-year social and environment bill, dealing a stunning blow to a cornerstone of Biden’s domestic agenda.

The Democratic-run House approved the measure in November, but Manchin abruptly announced he could not support the legislation because of its cost and his worries that it would fuel inflation. Similar provisions lowering pharmaceutical prices and raising taxes on some upper-income people were in that bill.

The West Virginian’s backing remains crucial in the 50-50 Senate. Democrats are using special procedures that would let them pass the pared-down package over expected unanimous GOP opposition with the tie-breaking vote of Vice President Kamala Harris.

Democrats are expected to unanimously back the Medicare solvency and prescription drug plans, one Democratic aide said. Manchin spokesperson Sam Runyon said the lawmaker “has always supported pathways” to keep Medicare solvent, and said his backing for lowering pharmaceutical costs “has never been in question.”

Senate parliamentarian Elizabeth MacDonough will have to certify that the new bill’s provisions adhere to the chamber’s budget rules. Last year, she ruled that language making it easier for immigrants to remain in the U.S. had to be removed because it violated prohibitions against using the special procedures to enact significant policy changes.

Medicare has 64 million beneficiaries. Its trust fund covering hospital services, called Part A, is financed largely from taxes deducted from peoples’ paychecks.

That trust fund gained two years of solvency, until 2028, in last month’s report by the program’s board of trustees. It attributed the improvement to the economy’s recovery from the coronavirus pandemic-spawned recession.

But both Medicare and Social Security face long-range financing problems, and the trustees suggested that lawmakers act “sooner rather than later” to strengthen them. Without congressional action, Medicare’s hospital trust fund would be able to pay only 90% of its costs in 2028 and less thereafter, the trustees said.

The proposal to increase taxes on some wealthier Americans would raise $203 billion over the coming decade, according to information examined by the AP that Congress’ Joint Committee on Taxation provided to Senate Democrats. Federal actuaries told the Democrats that such financing would delay the trust fund’s shortfall until 2031, another document showed.

House Passes Insulin Bill Over Insurers’ Opposition

House passes insulin bill over insurers' opposition - POLITICO

Source: Politico, by Alice Miranda Ollstein and Megan Wilson

The House voted Thursday in favor of a bill to cap out-of-pocket costs on insulin at $35 a month, a policy Democrats hope will give them a concrete win to campaign on when they face voters in November as the rest of their health care agenda remains stalled.

“At the end of the day, I hope that we can still bring forward a reconciliation bill with additional reforms this year. I know we need to do Medicare drug price negotiation,” Rep. Angie Craig (D-Minn.), the lead sponsor of the insulin bill, told POLITICO. “But we can’t wait any longer to act on insulin.”

Despite concerns about the bill’s policy and strategy from both sides of the aisle, nearly all House Democrats as well as a dozen Republicans voted for it Thursday. Yet it faces slim odds in the Senate, where Democratic leaders are combining an out-of-pocket cap on insulin — led by vulnerable Sen. Raphael Warnock (D-Ga.) — with a still-in-the-works bipartisan bill from Sens. Jeanne Shaheen (D-N.H.) and Susan Collins (R-Maine) to cut the drug’s cost.

The insurance industry tried to persuade lawmakers to oppose the measure, arguing it does not lower the actual price of insulin and could lead to higher premiums.

One insurance industry source close to the negotiations told POLITICO they’ve stressed that the bill “lets pharma off the hook,” calling it a “giveaway” to the drug industry.

“The premium impact is going to be substantial, and this isn’t the way to address the high cost of insulin,” said the lobbyist, who was granted anonymity to speak candidly about the process. “But all these Democrats want this win.”

America’s Health Insurance Plans, the trade association for insurers, wants Congress to target the pharmaceutical industry’s price-setting power instead of simply shielding patients from it. While the Shaheen-Collins bill in the Senate aims to do so, its details haven’t yet been released.

“Insulin prices are too high because Big Pharma alone sets and controls the price,” AHIP spokesperson David Allen said in a statement to POLITICO. “This legislation continues to empower Big Pharma to raise insulin prices with impunity leaving patients, businesses, and hardworking taxpayers paying even more for health care.”

Brian Newell, a spokesperson for PhRMA, drugmakers’ leading lobbying group, told POLITICO that, while they aren’t officially taking a position on the bill, they see it as “one way to help patients at the pharmacy counter” but believe that a more “holistic solution” that also reforms the drug rebate system is also needed.

“No amount of spin by the insurance industry changes the fact that they determine what patients pay at the pharmacy,” he added. “It’s outrageous that insurance companies are forcing patients to pay more for medicines than what insurance companies pay.”

More than a half-dozen pharmaceutical lobbyists told POLITICO that the industry has not been lobbying on the bill, saying the insurance industry is doing more to oppose the bill than drugmakers are doing to support it.

While some Democrats don’t view the insurance industry’s complaints about the bill as credible given their financial stake in the matter, others say they understand the concerns, though they ultimately voted for the measure.

“We aren’t putting that burden on Big Pharma, and I don’t blame [the insurers] for being upset about that,” Rep. Susan Wild (D-Pa.) told POLITICO, adding that she talked “at length” with insurance companies and agreed that the bill’s “big flaw”is how it changes who pays for insulin but doesn’t lower its cost.

Still, she countered, “It’s a matter of do we help people who are literally dying or rationing their insulin? … I have a greater concern for patients and for people in that position.”

Republicans largely lined up against the insulin bill during Wednesday’s House Rules Committee hearing. Some GOP members compared the price cap to President Jimmy Carter’s cap on the price of gasoline and claimed it would trigger similar shortages and long lines for the drug. Other Republicans said the policy would encourage U.S. pharmaceutical companies to relocate to China.

Rep. Michael Burgess (R-Texas) criticized Democrats for using the repeal of the Trump administration’s drug rebate rule —which was never implemented — as a funding mechanism.

“Those are made-up dollars. Those are not real dollars,” he said, calling it a “budgetary gimmick.”

Other GOP members on the panel pointed to a Congressional Budget Office analysis released Wednesday that appeared to back up insurers’ arguments. The CBO predicts the measure would cost the federal government more than $6 billion over a decade because it would likely force insurers to raise premiums. That would increase government subsidies paid through the Affordable Care Act and decrease income tax revenue because workers would spend more of their wages on their employers’ health plans.

Eli Lilly, one of the country’s leading insulin makers, “has long advocated for solutions to limit out-of-pocket costs on insulin,” said Shawn O’Neail, the vice president of their global government affairs division. But the company notes it hasn’t endorsed the bill.

Though the legislation easily passed the House on Thursday, it will be a much heavier lift in the Senate, where it needs support from at least 10 Republicans and all 50 Democrats. Though Warnock told POLITICO on Wednesday that he’s hearing “bipartisan interest in capping the cost of insulin,” no Republicans other than Collins have signed onto the effort, and multiple lobbyists said they don’t think it will garner enough Republican support to reach the 60-vote threshold in the upper chamber.

Still, Democrats believe those who oppose it will pay a political price in November.

“If my Republican colleagues don’t support it, I hope my voters back home see right through that,” Craig said. “You can make the case for voting against a big reconciliation bill, that you opposed this or that individual provision, but when it’s a standalone bill like this, there’s nowhere to hide.”

Last Updated 08/10/2022

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