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What's In the Inflation Reduction Act For Healthcare? Part 2 - Affordability

Part 1 of this post discussed how the new Inflation Reduction Act of 2022 (IRA) finally grants some limited powers to the Secretary of the Department of Health and Human Services to negotiate drug prices with pharmaceutical companies on behalf of Medicare recipients, and cap Medicare recipient monthly insulin costs at $35. This post will address other important healthcare topics handled in the Act.

Also exclusively for Medicare Part D recipients, effective in 2024, the IRA eliminates the Medicare Part D 5% coinsurance. Beginning in 2025, Medicare Part D will cap the annual out of pocket drug cost at $2,000. Currently, after reaching $2,000 out of pocket, Medicare Part D beneficiaries have to continue to pay 5% coinsurance on Part D drug costs until they reach about $7,000. The IRA will eliminate that requirement for every Medicare recipient regardless of income. Currently there is a catastrophic coverage option in Medicare for extraordinarily high out of pocket drug costs, but most people do not qualify. 

Also for Medicare recipients only, the IRA eliminates adult vaccine copayments beginning in 2023. 

The IRA does not have much to directly benefit those not on Medicare. It does change the threshold for receiving extra help subsidies with reduced health insurance premium costs for those shopping for health insurance on the Healthcare Marketplace. Previously, extra help was available only to those with income under about $32,500. The IRA extends it to those with income about $50,000 through 2025. 

But it is hoped that the downward market pressure on U.S. prescription drug costs realized through the IRA will eventually empower private health insurance companies to negotiate. It is also putting pharmacy benefit managers into the spotlight as Congress reviews their affect on prescription drug costs to the rest of the U.S. consumers. 

The out of pocket drug coverage improvement to Medicare "is arguably the most significant portion of the law," because patients can spend tens of thousands of dollars a year on drugs after Medicare covers its portion of the bill. ~ Stacie Dusetzina, Health Policy professor at Vanderbilt University Medical Center