Inflation Reduction Act lowers prescription drug and insurance costs

The Inflation Reduction Act, passed by Congress in September, includes significant changes designed to lower health care costs for patients on Medicare and Affordable Care Act (ACA) plans.

Medicare changes:

Starting in 2026, the federal government will be allowed to negotiate drug prices for 10 drugs, gradually scaling up to 20 drugs by 2029. Negotiations would apply to high spending brands and biologics without generics or biosimilar equivalents. 

Drug manufacturers are now required to pay rebates for drug prices that increase above the rate of inflation. This provision will apply to single-source drugs and biologicals under Medicare Part B, and all covered drugs under Medicare Part D.

The new law also caps drug costs under Medicare Part D to $2,000 per year starting in 2025. Premium growth will be limited to no more than 6% per year beginning in 2024 and running through 2030.

ACA changes:

The Inflation Reduction Act extends monthly premium subsidies for insurance plans purchased through the ACA marketplace. The subsidies were passed in 2021 as part of the American Rescue Plan Act and were set to expire at the end of 2022.

The subsidies have significantly reduced health insurance costs for low-income and middle-income households. The new law extends these subsidies through the end of 2025.

ACA Marketplace Open Enrollment for 2023 begins Nov. 1, 2022, and runs through January 15, 2023.

Leave a Reply

Your email address will not be published. Required fields are marked *