The act will also cap prescription and insulin costs for certain Medicare users, lower health insurance premiums, and provide expanded financial assistance for certain beneficiaries below the poverty level according to a report released by the White House Thursday, Aug. 18.
“I think that we’re going to have good cooperation from all sectors in the health care industry, whether it’s a drug manufacturers, the insurers, the providers, to make this work, because at the end of the day, we all want the same thing,” U.S. Health and Human Services Secretary Xavier Becerra said in a call Thursday. “We want to make sure that Americans are healthy and they have access to good quality care to keep them healthy.”
Health insurance tax credits were initially introduced by the Affordable Care Act, and were strengthened by the American Rescue Plan in 2021. The act will extend the tax credits, instead of letting them expire.
An HHS report showed that 44,000 Alabama residents would lose state health insurance coverage entirely and 24,000 would lose subsidies, if those tax credits expired. The Inflation Reduction Act extends premium tax credits until 2025.
Alabamians using aPart D drug prescription plan through Medicare will see “financial protections increased” in 2024, according to the report from U.S. Health and Human Services. In 2025, a $2,000 cap on out-of-pocket prescription costs will take effect. HHS wrote that of the 784,000 Alabamians that are Plan D beneficiaries, 22,000 pay more than the $2,000 cap for prescriptions.
Additionally, Medicare will be able to negotiate prices for high-cost drugs. The HHS cited the Kaiser Family Foundation’s prediction that between 5 to 7 million Americans use drugs that would be eligible for negotiation.
The HHS report noted that Americans pay 2-3 times the amount citizens of other countries pay for prescription drugs. In NiceRx’s 2021 Drug Report, Alabama ranked seventh in the U.S. for highest out-of-pocket prescription drug spending annually.
Dr. Meena Seshamani, Centers for Medicare and Medicaid Services deputy administrator and director of the Center for Medicare said she often cared for people who faced high prescription costs as a practicing physician.
“These numbers all represent real people with real lives and real issues that they’re dealing with. And as a physician, I cared for those people in my practice, and saw every day the struggles that people had with being able to pay for the medications that they needed to keep them healthy,” Seshamani said.
She recalled the struggle some patients faced, saying that some were “choosing between food on the table and choosing between a prescription,” or letting health conditions go on because they couldn’t afford medication.
A highly anticipated part of the Inflation Reduction Act is a cap on insulin at $35 per month. A report from GoodRx showed that average insulin prices increased by 54 percent nationwide from 2014-2019.
According to the Centers for Disease Control and Prevention,Alabama 12.7 percent of adults in Alabama have been diagnosed with diabetes, compared to the national median of 9.8 percent. HHS reported that 63,000 Alabamians on Medicare used insulin in 2020. The new price cap will take effect in 2023.
The act also provides “Extra Help,” or expanded low-income subsidies under Part D, beginning in 2024 for Medicare beneficiaries with incomes up to 150 percent of poverty. Currently, beneficiaries between 135-150 percent only receive partial help.
Those who qualify would not pay a premium on Part D, as well as limited co-payments. HHS reported that 12,000 Alabamians received partial help in 2020 and could benefit from the expansion.
Data from the U.S. Census American Community Survey estimated that 15.5 percent of Alabamians of all ages lived below the poverty level in 2019. Of residents 65 years and older, the survey estimated that 10.5 percent lived below the poverty level.
In 2021, the U.S. Census Bureau reported that the poverty threshold for a single-person household of an individual over the age of 65 was $12,996 and $16,379 for two adults over 65 years old.
The HHS report stated that the act will continue to lower premiums by an average of $750 annually for about 219,000 state residents. It will also require drug companies to pay Medicare a rebate if they increase drug prices faster than inflation, which HHS wrote would “further reduce out-of-pocket costs for Medicare beneficiaries, starting in 2023.”
Health care changes are just a small part of the 730-page legislation, which also addresses issues like climate change and taxes. Some Alabama Republicans voiced their disapproval for the Democrat-led bill and criticized the Biden administration after the president signed it into law Tuesday.
The Kaiser Family Foundation published a timeline detailing when each health care change from the Inflation Reduction Act will take place until 2029.
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