Lanny A. Kope: Inflation Reduction Act will have huge health care impact

Well, Congress — at least the Democrats — finally did it!

The folks on Capitol Hill enacted some improvements to Medicare that the public has wanted for many years.

The Inflation Reduction Act contains many components to benefit society, but a major portion is focused on health care, especially Medicare and the Affordable Care Act.

For years, in an attempt to lower prescription drug prices, there have been efforts to authorize Medicare to negotiate prices for prescription drugs. But Big Pharma has been relentless and successful in opposing this measure. A White House publication reported that Big Pharma spent $187 million opposing the negotiation proposal. And there were 1,600 lobbyists on the pharmaceutical companies' payrolls in 2021. Wow!

Beginning in 2025, there will be a cap placed on drug costs, which will be a real benefit for America's seniors who struggle to balance drug costs with other living expenses.

Negotiated prices for Medicare Part B will take effect in 2028, and the first negotiated prices will take effect in 2026 for drugs covered under Medicare Part D Plans. The full schedule is:

2026: A maximum of 10 drugs will be negotiated.

2027: Another maximum of 15 drugs will be negotiated.

2028: Another maximum of 15 drugs will be negotiated.

2029: Another maximum of 20 drugs will be negotiated this year and every year after that.

The question arises — so what if Big Pharma doesn't want to cooperate?

Should that occur, a tax of up to 95% of Big Pharma's previous year's sales could be imposed by the government.

How beneficial will drug negotiations be?

Well, the nonpartisan Congressional Budget Office estimates drug price negotiations could save Medicare nearly $102 billion over 10 years. CBO's prediction also dispelled claims that drug negotiation would lead to fewer new drugs being developed. CBO's prediction is that 1,300 new drugs are expected to be approved over the next 30 years.

One major flaw in the drug portion of the Act is that it doesn't take effect for three years — why? Unfortunately, that hasn't been publicized. For the Act to be most beneficial, the drug negotiation should take place now.

The other benefit found in the act is the subsidy provision for the ACA.

The premium assistance for individual health care now available under the ACA was extended for another three years to 2025.

If the subsidies were not renewed, it's been estimated by the Kaiser Foundation that individuals living in the 33 states having federal marketplaces would have had to pay a premium that was 53% higher.

A second prediction was that not extending subsidy support would cause more than 3 million individuals to lose their health coverage because they couldn't afford the premiums. The new law will extend this subsidy support through 2025.

So how does the subsidy program work?

If your annual income is less than 150% of the federal poverty level — $20,385 — you will be eligible for zero-premium coverage.

An annual income between 150% and 400% of the federal poverty level — $54,360 for an individual and $73,240 for a couple — qualifies you for premium subsidies. The amount of the subsidy depends on your income and what plan you choose.

If your annual income is higher than 400% of the federal poverty level — $81,540 — you will be eligible for subsidies if your premium payments are more than 8.5% of your income.

The three things that toss some water on any flaming enthusiasm are the prescription drug provisions not becoming effective for three years, Insulin copay caps at $35 a month only for Medicare beneficiaries. It's really difficult to understand why individuals oppose reducing prescription drug prices.

Maybe Congress should consider people, not party, and accelerate the effective date.