The Senate Action on Health Insurance (IRA) Receives Mostly Positive Industry Reactions
Medical and insurance organizations mostly praised the Senate’s approval of the Inflation Reduction Act (IRA) on Sunday, August 7, 2022. The Senate required Vice President Kamala Harris’ vote to send the bill to the democrat-controlled House on a hyper-partisan 51-50- vote.
The $750 billion Act has several national-level healthcare effects, including:
● Allowing Medicare to negotiate drug prices
● Providing a $35 cap on patients’ out-of-pocket insulin costs
● Capping seniors’ out-of-pocket expenditure on prescription drugs at $2,000
● Providing subsidies for patients who use the Affordable Care Act Marketplace to purchase health insurance
The Inflation Reduction Act (IRA)
The IRA earmarks $64 billion to extend health insurance subsidies under the American Rescue Plan through 2025. Democrats believe the subsidies will ensure affordable healthcare insurance for 13 million Americans with monthly premiums as low as $10.
As for allowing Medicare to negotiate drug prices, the bill enables the Department of Health and Human Services to negotiate lower Medicare prices from 2026. However, the negotiating power is limited to 10 drugs in 2026 before increasing the number to 15 and 20 in 2027 and 2029, respectively.
The bill also puts a $35 cap on Medicare patients’ monthly insulin costs, with a $2,000 limit on annual drug costs. Democrats failed to include a monthly cap for commercial plans, which the Senate GOP shot down. The bill will also force pharmaceutical companies to pay rebates if they raise Medicare drug prices over the inflation rate.
The sweeping package also combats climate change, reduces the federal deficit, and raises taxes on the country’s top billion-dollar corporations. In addition, it authorizes the biggest burst of US spending in history to tackle global warming. $370 billion will help reduce greenhouse gas emissions to 40% lower than their levels in 2005 before the decade’s end.
American College of Physicians (ACP)
ACP President Ryan D. Mire, MD, FACP, praised the legislation because it increases access to healthcare and improves the health of Americans. In a published statement, Mire said he was glad to see the bill’s final version included many of the essential provisions the ACP had highlighted earlier.
Mire said that the bill would extend subsidies for health insurance plans under ACT for three more years while Medicare would have the power to negotiate lower drug prices in favor of patients. The legislation will further help reduce carbon pollution while advancing clean energy solutions. The ACP was also encouraged that the bill caps insulin costs, allowing senior patients under Medicare access to life-saving medication.
Mire finished by calling on the House to pass the bill swiftly.
Association of American Medical Colleges (AAMC)
The AAMC also released a statement supporting the new legislation. The association’s President, David J. Skorton, MD, applauded the US Senate for passing IRA because it would benefit patients, families, and communities. In addition, it increases access to quality care nationwide by extending ACA premium tax credits and lowering the price of costly prescription drugs.
Skorton said the legislation would earmark $64 billion for the Affordable Care Act insurance subsidies. He added that the COVID-19 pandemic highlighted significant disparities in access to medical care and insurance coverage. He commended senators for passing the bill that allows patients and their families to maintain access to critical and affordable insurance coverage.
According to Skorton, IRA empowers people to seek medical care early before treatable conditions become costly and complicated. He added that the high cost of prescription medication often prevented patients from getting the drugs they needed. Therefore, the AAMC supports efforts to lower drug costs to increase access to affordable medicines. Skorton also urged the House of Representatives to Pass IRA quickly to improve the health of US patients and communities.
Louise Norris, a health policy analyst for healthisurance.org, also praised the IRA as excellent news for 13 million Americans who depend on premium subsidies to afford marketplace health coverage. According to Norris, bigger and widely available subsidies have seen record-high marketplace enrollment.
Norris added that if Congress fails to act now, Millions of Americans will see their subsidies decrease considerably or disappear altogether in 2023. Today, around three million current enrollees stand to lose their coverage. Therefore, the Senate’s vote to pass the IRA legislation is a significant step toward ensuring these people still afford their health coverage in 2023.
Kim Keck, the President of the Blue Cross Shield Association, also supported extending the tax credits to protect the 13 million Americans relying on subsidies to keep their medical costs down. Keck said the cost protection comes when inflation in the US has pushed the price of everything up – from gas to groceries. He added that the move promises to keep real money in people’s pockets and give them peace of mind.
America’s Health Insurance Plans President and CEO Matt Eyles said in his press statement that Americans deserve access to affordable healthcare coverage and high-quality medical care. He added that the recent Senate action would support millions of American families working hard to purchase health coverage.
The Association for Community Affiliated Plans CEO Margret A. Murray said her organization was critical in calling for the extension of enhanced APTCs to keep health premiums affordable and promote the uptake of comprehensive coverage through marketplaces.
Murray added that more work was left undone for Congress and the administration even after the bill passed. She said it was essential to strengthen Medicaid and CHIP for pediatric and postpartum patients but praised the IRA as an excellent start. She asked the House to send the bill to President Biden quickly for his signature because it protects millions of people.
The Endocrine Society also issued a statement praising and supporting the IRA because it addresses high insulin costs. Over seven million people rely on insulin in the US to manage diabetes and live. So far, the US CDC has logged 37.3 million people with type II diabetes, or 11% of the population.
From 2002 to 2013, insulin nearly tripled in price with a constant upward trend continuing into 2022. However, the society noted that the Senate failed to help children and adults living with type I diabetes after republicans voted against the provision to cap out-of-pocket costs for people with private insurance that the Endocrine Society supported.
Other Reactions to the Senate Action
President Joe Biden also praised the Senate’s passing of the IRA in his statement, leading with the bill’s potential health care benefits. The president noted that the IRA would lower the cost of prescription medications and health insurance. Biden added that he ran for office on the promise of making the US government work for working families, which is what the bill does.
The president also said the bill pays for all the proposed benefits by establishing a minimum corporate tax on the country’s wealthiest corporations. He added that companies making less than $400,000 a year would not pay more taxes. He finished his statement by thanking members of the Senate Democratic caucus and leader Schumer for their support, saying he looked forward to signing it into law once it passes the House.
PhRMA was Not Pleased
Predictions have arisen claiming that the new law will negatively affect innovation in the pharmaceutical industry, resulting in negative consequences for Americans. PhRMA was displeased by the bill and still maintains that patients lose when governments set drug prices.
Stephen J. Ubl, PhRMA’s President and CEO, was skeptical of the bill’s benefits and promises stating that the government would move from setting the prices for critical medicines to demand more control over the country’s health care system, with patients becoming the collateral damage.
The PhRMA CEO called on the House to reject the partisan bill and focus on bipartisan reforms that lower pharmacy costs and protect patients.
Hospitals embraced the bill as a step forward but noted it lacked in some areas. America’s Essential Hospitals’ President and CEO Bruce Siegel, MD, said that extending the health coverage subsidies would safeguard access to medical care for millions of families and individuals. The critical outcome is necessary given the threat of public health challenges such as COVID-19 and monkeypox.
However, Siegel said hospitals did not get everything they wanted. For example, the bill lacks funding for hospital workforces and the critical infrastructure needed to improve healthcare. In addition, hospitals face persistent challenges such as staffing shortages, infrastructure constraints, and high labor costs. Siegel said hospitals need more funding to meet these and other challenges in the future.
What is Next for the Bill?
The IRA passed as a reconciliation bill, meaning it needed a simple majority to pass instead of the 60 votes democrats required to avoid a filibuster. Reconciliation bills relate to the federal budget, which is why the Senate parliamentarian ruled against extending the cap to the commercial market since it was not associated with the federal budget.
The bill must pass the House before President Joe Biden signs it into law. Fortunately, experts expect the legislation to pass the House swiftly.
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