Healthcare costs lowered by Inflation Reduction Act (Times op-ed)

IInflation has our immediate attention. Particularly for those with fixed incomes, this past year’s increased costs for every day needs are very worrisome. The blame game in our news is ongoing, particularly with a congressional election at our doorstep.

The Inflation Reduction Act (IRA) passed by Congress, signed by President Biden, and enacted on Aug. 16 will help families with their healthcare costs. The bill involves many different parts. I would like to focus my opinion piece today on the healthcare provisions.

Allow me to remind you that I remain totally convinced that “Improved Medicare for All” remains the only viable long-term solution to provide affordable, accessible, high-quality health care for all Americans. Our present system continues to cost us much more than necessary compared to an “Improved Medicare for All” format. However, any reduction in our out-of-pocket (OOP) costs today and in the future is beneficial as we try to pay for our healthcare needs and meet our family budgets.

As Lovisa Gustafsson and Sara R. Collins stated in their recent article available through the Commonwealth Fund, “The Inflation Reduction Act makes notable strides toward improving the affordability and accessibility of health care by addressing two acute areas of consumer need: extending premium subsidies in the Affordable Care Act (ACA) marketplaces and lowering prescription drug prices and OOP costs for Medicare beneficiaries.”

Healthcare costs continue to cause many Americans tremendous financial strife. In a survey by Kaiser Family Foundation published in April 2022, 83% of adults thought that the costs of prescriptions were unreasonable, 29% claimed that over the previous year, they had not taken prescription medications as directed due to costs, and 26% of adults stated that it was very difficult for them to afford their prescription drugs.

Historically, the ACA of 2010 provided new subsidies for health insurance premiums. However, people who were just above the income of four times the Federal Poverty Level (FPL) were still left with no financial assistance and higher premiums. This phenomenon is now called the “health insurance cliff.” With passage of the American Rescue Plan Act (ARPA) in 2021, for the first time, those who earned more than four times the Federal Poverty Level (FPL) also received a subsidy towards the cost of their healthcare premiums. This change saved millions of people thousands of dollars a year in healthcare OOP costs. A record 14.5 million people signed up for coverage, 13 million of whom had received subsidies.

These subsidies, however, were to expire at the end of this year. Thanks to the IRA’s passage this August, these subsidies are now extended for three more years. If this bill had not passed, millions of people may not have been able to afford the increased OOP costs for their healthcare premiums. Case in point, although I only had to pay for six months of health insurance premiums for my wife (I am on Medicare), we still saved $800 per month thanks to the subsidy. Please note that not one Republican in the US Senate or House of Representatives voted for this bill.

The IRA also addresses OOP costs for Medicare prescription medications. For the first time, the federal government is required to negotiate prices for some of the highest-priced drugs paid for by Medicare. The IRA will require drug companies to pay rebates if prices rise faster than inflation for prescriptions used by Medicare-insured individuals. The act limits the OOP cost for insulin to no more than $35 per month for Medicare participants. Beginning in 2024, the act also eliminates the 5% catastrophic coinsurance that Medicare individuals have had to pay on very expensive medications, even after they had met their deductible for the year. In 2025, it will drop the deductible for all Medicare prescriptions per person from $3,250 in 2024 to $2,000 in 2025 and thereafter.

In addition, the IRA will eliminate co-pays for all immunizations recommended by the Advisory Committee on Immunization Practices (ACIP). As a family physician, I discovered that the OOP expense for my patients often caused them to choose to skip the shingles shot, increasing their risk of experiencing shingles and the potential for its long-term complications. Now Medicare patients will not have OOP costs for this vaccine, nor any other vaccinations recommended by ACIP. The IRA also expands eligibility for Full Benefits under the Part D Low-Income Subsidy (LIS) Program by raising the income levels required to receive these full benefits.

The Kaiser Family Foundation article explained that 1.3 million Medicare recipients should benefit from eliminating the 5% catastrophic coinsurance, 1.4 million should benefit from capping OOP drug costs in Medicare Part D at $2,000, 4.1 million should benefit from no longer having to pay OOP costs for immunizations recommended by ACIP and 0.4 million should benefit from expanding eligibility for full benefits for Medicare Part D Low-Income Subsidies up to 150%.

In addition, if the ARPA subsidies had expired at the end of this year without passage of the IRA, almost all 13 million subsidized enrollees would have experienced a significant increase in their premium payments. The average premium would have increased by 53%, to more than $700 annually. The “subsidy cliff” would have returned. Many of these 13 million people would have experienced a double whammy of loss of their premium subsidy as well as increased premium rates charged by insurance companies for the upcoming year. I repeat, not one Republican in Congress, no Republican house representative or senator, voted for this bill.

I am personally thankful for the passage of the Inflation Reduction Act. In addition to the healthcare benefits mentioned above, it addresses energy and climate change while funding these initiatives in part with a new 15% minimum tax rate on corporations whose profits are greater than 1 billion or more dollars a year. It also adds a 1% tax on companies who buy back their own stock, and the bill improves the Internal Revenue Service’s ability to reduce tax evasion.

Our country is presently torn by opposing beliefs as to what is best for our nation. Certain media sources pour gasoline onto this fire of discontent, many times with misinformation. As we consume our sources of “news,” we need to be mindful that everything we read and hear is not true or factual.

Dwight Michael, M.D., a retired family physician, is a member of Gettysburg Democracy for America’s Healthcare Task Force.