Veronica Walsh is a first-year law student at American University Washington College of Law. Veronica is a graduate of the University of Massachusetts Amherst with a degree in Legal Studies and Political Science.

Nearly 13 years after the passage of the Affordable Care Act (ACA), President Biden signed the Inflation Reduction Act (IRA), creating more affordable healthcare options.[1] In 2010, Congress passed the ACA which created affordable health insurance options through premium tax credits, Medicaid expansion, and medical care delivery methods designed to lower healthcare costs.[2] However, healthcare remains inaccessible due to high deductibles and increases in consumer cost-sharing, even with subsidies.[3]

The U.S. spends significantly more money than any other country on medical care.[4] The U.S. spends nearly double that of other comparable countries spend on medical care.[5] In the U.S., a policyholder’s typical deductible for employer-based and ACA plans is over $1,000.[6] Plan members may still be required to pay co-pays and other cost-sharing even after satisfying a deductible.[7]

The IRA contains various provisions lowering the price of prescription drug costs for Medicare members.[8] The Act allows Medicare to negotiate with drug companies for lower prescription drug prices and establishes a yearly out-of-pocket cap of $2,000 on out-of-pocket prescription costs.[9]

The IRA restructures the cost-sharing for Medicare members in the catastrophic phase of their Medicare Part D plans.[10] Previously, beneficiaries were responsible for 5% of the cost of their medication under the catastrophic phase.[11] Under the IRA, Medicare members are responsible for 0% of the cost of their medication under the catastrophic phase.[12] Through 2025, the Act will continue to lower health insurance premiums for plans purchased through federal and state marketplaces.[13]

Starting in 2023, Medicare members will see Medicare Part D coverage changes.[14] For Medicare members, vaccines will no longer carry any cost-sharing.[15] The Act prohibits prescription drug companies from raising prices rapidly, higher than inflation.[16] In addition, no Medicare member will be charged more than $35 for insulin.[17]

Critics of the IRA’s healthcare provisions complain the measures unfairly target the pharmaceutical industry, stifling pharmaceutical innovation.[18] With Medicare’s now able to negotiate prices with drug companies, critics argue profit margins may be lowered, discouraging new scientific developments.[19] The Act does not regulate other healthcare sectors such as the hospital inpatient industry which accounts for higher overall expenditures compared to pharmaceuticals.[20] Republican Senators have since introduced the Protecting Drug Innovation Act, which aims to rescind government authority over prescription drug prices.[21] The Protecting Drug Innovation Act was introduced in September 2022 and has yet to be passed through Congress.[22]

Proponents of the Act argue Medicare members acutely experience prescription drug prices due to the high out-of-pocket spending caps and high costs of medications.[23] Supporters emphasize the Medicare Part D provisions help remedy access and affordability issues.[24] Advocates also assert “profit motives are not sufficient for the public’s health”; given the existence of medication supply shortages throughout global pandemics.[25]

As of right now, there have not been any efforts to overturn the provisions of the IRA in court. [26] However, as the year progresses, the fate of the IRA may be tested.

 

[1] About the Affordable Care Act, U.S. Department of Health and Human Services (March 17, 2022), https://www.hhs.gov/healthcare/about-the-aca/index.html; Inflation Reduction Act of 2022, H.R. 5376, 117th Cong. (2022), https://www.congress.gov/bill/117th-congress/house-bill/5376/text; Press Release, White House, The Inflation Reduction Act Will Cut Health Care Costs for D.C. Residents, (Aug. 18, 2022), https://www.whitehouse.gov/wp-content/uploads/2022/08/D.C.-Health-Care.pdf.

[2] About the Affordable Care Act, U.S. Department of Health and Human Services (March 17, 2022), https://www.hhs.gov/healthcare/about-the-aca/index.html.

[3] Helaine Olen, The Affordable Care Act is Still Not Enough, The Washington Post (June 18, 2021, 8:00 AM), https://www.washingtonpost.com/opinions/2021/06/18/affordable-care-act-is-still-not-enough/.

[4] Id.

[5] Emma Wagner et al., How does health spending in the U.S. compare to other countries?, Peterson-KFF Health System Tracker, Jan. 21, 2022, https://www.healthsystemtracker.org/chart-collection/health-spending-u-s.

[6] Helaine Olen, The Affordable Care Act is Still Not Enough, The Washington Post (June 18, 2021, 8:00 AM), https://www.washingtonpost.com/opinions/2021/06/18/affordable-care-act-is-still-not-enough/.

[7] Id.

[8] Press Release, White House, The Inflation Reduction Act Will Cut Health Care Costs for D.C. Residents, (Aug. 18, 2022), https://www.whitehouse.gov/wp-content/uploads/2022/08/D.C.-Health-Care.pdf.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Press Release, Centers for Medicare & Medicaid Services, National Health Spending in 2020 Increases due to Impact of Covid-10 Pandemic (Dec. 15, 2021), https://www.cms.gov/newsroom/press-releases/national-health-spending-2020-increases-due-impact-covid-19-pandemic; Press Release, White House, The Inflation Reduction Act Will Cut Health Care Costs for D.C. Residents, (Aug. 18, 2022), https://www.whitehouse.gov/wp-content/uploads/2022/08/D.C.-Health-Care.pdf.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Joshua Cohen, Critics Decry Drug Pricing Provisions  In Inflation Reduction Act, Say They Will Stifle Innovation, Forbes (Aug. 2, 2022 11:28AM) https://www.forbes.com/sites/joshuacohen/2022/08/02/critics-decry-drug-pricing-provisions-in-inflation-reduction-act-say-they-will-stifle-innovation/?sh=6422c751222d.

[19] Id.

[20] Id.

[21] Joseph Choi, Senate Republican bill would repeal Democratic drug pricing law, The Hill (Oct. 7, 2022 3:36PM) https://thehill.com/homenews/senate/3678314-senate-republican-bill-would-repeal-dem-drug-pricing-law/; Protect Drug Innovation Act, S. 4953, 117th Cong. (2022), https://www.congress.gov/bill/117th-congress/senate-bill/4953

[22] Protect Drug Innovation Act, S. 4953, 117th Cong. (2022), https://www.congress.gov/bill/117th-congress/senate-bill/4953.

[23] Joshua Cohen, Critics Decry Drug Pricing Provisions  In Inflation Reduction Act, Say They Will Stifle Innovation, Forbes (Aug. 2, 2022 11:28AM) https://www.forbes.com/sites/joshuacohen/2022/08/02/critics-decry-drug-pricing-provisions-in-inflation-reduction-act-say-they-will-stifle-innovation/?sh=6422c751222d.

[24] Megan Ranney, Opinion: Why the US is having shortages of antibiotics now, CNN (Nov. 28, 2022) https://www.cnn.com/2022/11/28/opinions/drug-shortages-antibiotics-ranney.

[25] Id.

[26] Kaustuv Basu, Drug Price Law to Spur Creative Claims as Industry Readies Fight, Bloomberg L. (Sept. 29, 2022, 5:44AM), https://news.bloomberglaw.com/health-law-and-business/drug-price-law-to-spur-creative-claims-as-industry-readies-fight.