Inflation Reduction Act: Healthcare provisions and impacts

On August 16, 2022, President Joe Biden signed into law the Inflation Reduction Act of 2022 (IRA), which was passed by the Senate and House through the budget reconciliation process on August 7 and August 12, respectively. Although the IRA does not include some notable healthcare policies originally proposed in the Build Back Better Act (e.g., dental, vision and hearing benefits in Medicare; coverage of individuals in Medicaid non-expansion states; and additional investments in home and community-based services), the package is one of the most consequential pieces of legislation for the healthcare sector since passage of the ACA in 2010. The IRA will, among other things, impose rebates on drug manufacturers raising Medicare prices faster than inflation beginning in 2023, cap Medicare beneficiary insulin costs at $35/month beginning in 2023, eliminate 5% coinsurance for Part D catastrophic coverage in 2024, cap beneficiary Part D out-of-pocket costs at $2,000 beginning in 2025, allow limited Medicare drug price negotiation beginning in 2026, and extend enhanced ACA subsidies through 2025. As a result, the Inflation Reduction Act of 2022 could have a significant impact on both cost and coverage for healthcare insurance for millions of Americans, reduce out-of-pocket costs of prescription drugs for many Medicare beneficiaries, and slow the growth of prescription drug costs for the Medicare Program.

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