People vs Special Interests: Americans Score Major Victory in Healthcare Reforms and Climate Package

In the constant political tug-of-war between the People vs Special Interests – the People scored a big win in the recent passage of the Inflation Reduction Act (IRA) of 2022, signed into law by President Joe Biden.

Seniors, consumers, families, the environment – just about every American stands to benefit in some way. In both the Senate and House, lawmakers passed IRA in a party-line vote by 51-50 (vice president Kamala Harris broke tie in Senate) and House 220 to 207.

Nobel Prize economist Paul Krugman said IRA is the largest climate investment in the nation’s history, “mainly a climate change bill with a side helping of health reform.”

Medicare to negotiate prescription drug prices
The health reforms in the bill happen to be profoundly monumental, initiatives that Pharma has fought to stave off from becoming law over the span of three decades. Arguably the most significant among them is Medicare will now be given the power to negotiate prescription drugs which experts say will ultimately help to keep down the cost of medications.

According to the Kaiser Family Foundation, prescription drugs represent 10% of national health spending and nearly 20% of health benefit costs for large employers and Medicare. With IRA’s passage, Medicare would gain the power to negotiate its costs for pharmaceuticals, initially in 2026 for 10 drugs.

In Hawaii there are over 280,000 seniors who get their health care through Medicare. They will be pleased to see price reductions on some of their life-saving drugs. This is long overdue and we have Congress’ Democratic party class of 2022 and President Joe Biden to thank for finally delivering on this right for Medicare to benefit our seniors.

Caps on Out-of-Pocket Costs
Another major struggle over years that Medicare, seniors and senior-advocacy groups have been fighting for is to cap Out-of-Pocket costs on prescriptions drugs. This has been a financial problem for seniors who have chronic health problems and must take multiple drugs just to stay alive. Seniors have reported having to ration (take less and not as prescribed by doctors), choose between medications they can afford or do without taking medications entirely.

IRA’s health reforms scored another big victory by capping Out-of- Pocket Costs at $2,000 a year for seniors with the option to break that amount into affordable monthly payments. This will start in 2025. People with devastating illnesses like cancer that have drugs costing tens of thousands will finally get the relief they’ve been asking politicians for.

In yet another major health reform, beginning next year diabetes patients who have to pay exorbitant prices for the diabetes drug insulin will pay no more than $35 monthly. There are also provisions in IRA to help keep health care premiums low for low income families.

IRA’s passage is a major victory for the people. However, the criticism that must be mentioned is that these reforms should have been set to start earlier (again, price negotiations starts in 2026 and Out-of-Pocket caps begins in 2025).

The Inflation Reduction Act is really a smaller scale version of the Build Back Better (BBB) plan that did not pass last year. Included in BBB but have failed to be included in IRA were plans to lower the age of Medicare eligibility from 65 to 62, as well as the inclusion of eyes, ear and dental as part of Medicare’s basic coverage. The fight for these provisions should be continued into the future.

Climate Change Victory
While many of the original reforms in BBB were not included as the Medicare benefits stated above, as well as the original proposals of free prekindergarten, paid family and medical leave — energy and environmental experts say that the Climate provisions of BBB were largely kept intact and passed  in IRA. Still, climate experts believe more must be done.

The REPEAT Project, compiled by Princeton’s ZERO Lab, has produced a side-by-side comparison of emissions cuts under the Inflation Reduction Act and the earlier House version of Build Back Better. By 2035 the IRA, they estimate, will have delivered more than 90% of the emissions reductions that BBBB would have achieved. After all that legislative drama, Biden’s climate policy has emerged essentially intact.

The climate package could reduce America’s emissions by about 40% by 2030. The bill aims at expanding renewable energy sources and lowering planet-heating emissions. The bill not only reduces our dependence on fossil fuels and reduce emissions of greenhouse gases, it will also reduce other forms of pollution, notably nitrogen oxides and sulfur, that have negative effects on death rates, illness, and crop yields, experts say.

The package, which represents the largest climate investment in the nation’s history, a $369 billion price tag for decarbonization, will be paid for by a combination of tax credits and taxing large companies.  Funding aimed at consumers includes:

– $9 billion in home energy rebate programs to help people electrify their home appliances and for energy-efficient retrofits, with a focus on low-income consumers

– 10 years of consumer tax credits to make heat pumps, rooftop solar, electric HVAC, and water heaters more affordable, which make homes more energy efficient

– $4,000 in consumer tax credits for lower- and middle-income individuals who buy used electric vehicles and up to $7,500 tax credits for new EVs

– $1 billion grant program to make affordable housing more energy efficient

The timing of IRA becoming law clearly could have a political implication on the midterm and benefit Democrats. How much? No one really knows. But to Democrats who’ve been criticizing that Democrat-majority politicians have failed to deliver on substantive changes – IRA’s success is certainly a big deal and it could inspire with greater vigor for voters to go to the polls.