How the Healthcare and Climate Bill May Affect You

The landmark legislation will propel the U.S. toward climate goals. But here’s what it means for your healthcare costs.

man reviewing his medications and healthcare plan

Medically reviewed in August 2022

Updated on August 12, 2022

President Biden signed into law a sweeping package to combat climate change, tackle the high cost of prescription drugs, enforce the tax code more fairly, and lower the federal deficit by $305 billion through 2031. After months of debate, the landmark bill, known as the Inflation Reduction Act of 2022, was passed by the U.S. House of Representatives after being approved by the Senate.

The legislation allocates nearly $370 billion for the reduction of greenhouse gas emissions to 40 percent below their 2005 levels by the end of this decade. The bill bolsters the production of clean energy, offering tax credits for Americans to help them transition to cheaper, more sustainable energy sources, such as electric vehicles and solar power. It’s the largest investment in energy security and climate action in American history.

Mounting research shows that climate change is affecting health in a variety of ways, including increasing the risk for heat-related illness, mental health consequences and the worsening of existing health issues, such as diabetes. Actions aimed at slowing climate change can help safeguard human health, helping to alleviate these long-term effects.

But the Inflation Reduction Act will also have some immediate effects on healthcare as well. Here is how the bill may affect you directly:

Lower prescription drug prices: Under the Inflation Reduction Act, certain costly and commonly used prescription drugs are more affordable for more than 63 million people covered by Medicare. The bill empowers the Department of Health and Human Services (HHS) to negotiate with drug companies—something that has been prohibited for nearly two decades. Initially, the agency is required to negotiate the cost of 10 drugs in 2026. This will be expanded to include up to 20 drugs over time.

The bill caps out-of-pocket prescription drug costs for seniors at $2,000 annually, starting in 2025. These costs can also be broken up into more affordable payment plans.

Meanwhile, drug companies that raise the cost of medications above the rate of inflation will now face penalties. These companies must pay a rebate to Medicare for Part B drugs, beginning in October 2022. They must also pay a rebate for Part D drugs as of April 2023.

Free vaccines for adults on Medicaid. The landmark bill ensures Medicaid recipients have access to all recommended vaccines at no out-of-pocket costs.

Lower health care premiums for millions: The Inflation Reduction Act extends Affordable Care Act (ACA) marketplace subsidies until 2025. These subsidies, which were set to expire in 2023, enabled 7 million more people qualify for no-cost health insurance. They also help average families save hundreds of dollars per year on their healthcare premiums. Extending subsidies—and ensuring that ACA marketplace coverage is more affordable—will prevent roughly 3 million people from losing their healthcare coverage, according to an analysis by the Robert Wood Johnson Foundation.

A monthly cap on insulin costs for those with Medicare: Some 7.4 million Americans with diabetes rely on insulin to manage their condition. But the average list price for the drug has jumped 11 percent per year between 2001 and 2018. Insulin costs can spike to $900 monthly for the 68 percent of uninsured people who are paying full price for the drug. Up to 24 percent of those taking insulin may ration their intake due to costs, making it harder for them to manage their disease and prevent serious complications.

“One in every three dollars spent on drugs in the U.S. is spent on someone with diabetes, said Lisa Murdock, the ADA’s chief advocacy officer in a July 28 statement. “And we believe strongly that prescription drug reforms in the Inflation Reduction Act should specifically address the rising cost of insulin.”

Under the Inflation Reduction Act, the price for insulin is limited to no more than $35 per month in out-of-pocket costs for Medicare patients.

Article sources open article sources

U.S. Senate. SUMMARY: THE INFLATION REDUCTION ACT OF 2022. Accessed Aug 8, 2022.
Committee for a Responsible Federal Budget. What's In the Inflation Reduction Act? Jul 28, 2022.
Bob Casey U.S. Senator, Pennsylvania. Casey Applauds Senate Passage of Inflation Reduction Act, Historic Bill to Lower Costs for Families and Tackle Climate Crisis. Aug 7, 2022.
American Public Health Association. Public Health Opportunities to Address the Health Effects of Climate Change. Accessed Aug 8, 2022.
Robert Wood Johnson Foundation. What if the American Rescue Plan Act Premium Tax Credits Expire? Apr 7, 2022.
Insulin — the new battleground for drug pricing. Nat Biotechnol 40, 1 (2022).
American Diabetes Association. American Diabetes Association Announces Support for Changes to the Inflation Reduction Act. Jul 28, 2022.

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