How does the new Inflation Reduction Act affect Medicare?
Several parts of the landmark legislation are specifically aimed at seniors, particularly in terms of healthcare with new benefits on the way.
The rebranded Build Back Better act, now known as the Inflation Reduction Act, has been signed by President Biden. It seeks to deal with the high inflationary pressures in the US economy by expanding opportunities for Americans to reduce their dependecy on the main driver of inflation at present; fuel prices.
However, the bill includes other provisions relating to Medicare. Addressing many issues like the rampant price of drugs has long been a Democrat aim and the bill goes some way to addressing this with caps on prices on certain drugs while also giving long-term help to the system itself to negotiate better prices to reduce costs, though not all of these benefits will kick in immediately.
Here are some of the most important changes the bill makes to Medicare.
Medicare can finally negotiate its own drug prices, but not yet
The act allows Medicare to negotiate for the price of prescription drugs starting in 2026. At present, the country’s largest healthcare provider cannot negotiate the price of drugs it purchases, leaving prices at the whim of drug providers. Much like the National Health Service in the UK, Medicare will now be able to drive down the price of drugs it purchases, potentially increasing options for senior medication at cheaper prices.
From 2026, 10 drugs will be on the list with an additional 15 the following year with 20 more each year after.
Caps on drug prices and expenses
There are also new limits on out of pocket expenses for drugs, which will be limited at $2,000 a year from 2025. In 2019, 1.5 million seniors spent more than $2,000 on prescriptions, according to the Kaiser Family Foundation. 400,000 more Medicare beneficiaries are expected to be eligible for the Low Income Subsidy. This is an aspect of the Obama-era Affordable Care act which will make it cheaper for those buying their own healthcare.
Medicare enrollees are further protected in terms of insulin. The price of insulin will be capped at $35 per month. This was to be rolled out for all Americans that have private insurance but this was voted down by Republican senators, drawing the ire of many. At present it can cost between $175 and $300 for a vial of insulin, of which most need at least three a month. 35 million Americans require insulin due to health issues.