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Yes to easing drug, health care costs
The Inflation Reduction Act has smart, targeted fixes for prescription drug and health insurance cost relief.
August 11, 2022 at 10:33PM
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Minnesota's U.S. House representatives and their colleagues are expected to vote Friday on the sprawling Inflation Reduction Act (IRA). As they consider this historic bill and its consumer-friendly fixes for rising health care costs, here's important context:
In a fall 2021 poll, 83% of American adults surveyed by the nonpartisan Kaiser Family Foundation (KFF) said prescription drug prices are "unreasonable." Close to 30% reported that they hadn't taken their medications as directed in the past year due to cost.
In an era in which common ground is rare, there's clearly broad support for tackling this pocketbook issue. The IRA legislation, passed last week by Senate Democrats, has numerous fixes. Voting yes should be easy.
Its passage would offer price relief for seniors on Medicare struggling with medication costs. While much of the news coverage has focused on this, it's also important to note that the IRA also would assist younger people who are shouldering monthly premiums for private health insurance.
Medicare, of course, is the federally run health care program for seniors. It serves nearly 64 million Americans, with eligibility typically beginning at age 65. One of the IRA's most ambitious reforms would empower this program to wield its vast purchasing power to negotiate lower prices with the pharmaceutical industry on a limited number of drugs. The idea is to pass along savings to enrollees.
Implementation would begin in 2026 with 10 drugs, with the number incrementally increasing in following years. It's not clear yet which drugs would be selected. It'd be a cautious rollout, to be sure, but still a political win against the drug industry's lobbying might.
This deliberative approach may frustrate some health care advocates, but it acknowledges the complexities inherent in any health reform. The glitch-filled debut of MNsure and Healthcare.gov, the Affordable Care Act's online insurance marketplaces, serves as a humbling reminder of what can go wrong at the starting line.
A deliberative approach also would allow for the detection of unintended consequences, with the Congressional Budget Office among those warning of a potential chilling effect on drug innovation.
Other key IRA provisions to help seniors would start sooner and include:
- Limiting Medicare enrollees' monthly insulin costs at $35 a month, a change expected to go into effect in 2023.
- Capping annual out-of-pocket prescription drug costs at $2,000, which would begin in 2025. KFF estimates that 27,135 Minnesota enrollees would be helped by this cap, with a total of 1.4 million nationally seeing savings. "Shout it from the rooftops," tweeted Mayo Clinic's Dr. Vincent Rajkumar in a celebratory response to this measure's inclusion in the IRA.
KFF offers a more detailed account of the legislation's other helpful measures for seniors online at tinyurl.com/KFFoverview.
Again, the IRA's health reforms don't just aid Medicare enrollees. The legislation also extends financial assistance for those who buy health insurance on their own instead of getting it through an employer or government program.
Individual health plan buyers include those who are self-employed as well as retirees who are still too young for Medicare. The problem with finding affordable coverage for those on the individual market has been twofold. One, the plans often are expensive. And two, many entrepreneurs or early retirees make too much to qualify for the Affordable Care Act's financial aid to buy a health plan.
A pandemic relief plan temporarily eliminated the 400% federal poverty level income cap ($54,360 for individuals, $73,240 for a household of two) on eligibility for the Affordable Care Act's financial assistance. But that two-year fix was set to expire.
The IRA, if passed, leaves this expanded financial eligibility in place for 2023, 2024 and 2025. That would help middle-income Minnesotans shopping for coverage during this fall's open enrollment for 2023 coverage. This financial assistance acts as an instant discount for insurance premiums, potentially shaving hundreds of dollars off a monthly bill.
The financial aid is only available in Minnesota through MNsure.
The state has a record low uninsurance rate of 4%. The IRA is poised to help drive that even lower while helping seniors better afford their medications. Let's get it across the finish line and to the president's desk for signing.
Now that Gov. Tim Walz’s vice presidential bid has ended, there’s important work to do at home. Reinvigorating that “One Minnesota” campaign is a must.
