Democrats are no longer racing against a countdown to finalize Affordable Care Act subsidies ahead of open enrollment after the historic passing of the Inflation Reduction Act this month. Insurers have been calling on Congress to provide clarity on premiums repeatedly, as the 2023 rates needed to be locked in by the end of this month. After the initial bill stalled in Congress due to opposition from all Republicans, and the specific standstill opposition of Senator Joe Manchin – a sigh of relief can finally be let out.
The renewal of Affordable Care Act subsidies, one of the two surviving components of the bill, is popular with voters, who overwhelmingly support the extension and see it as an important priority to lower health care costs. According to a new Morning Consult/Politico survey done in mid-July, two in three voters support the renewal of ACA subsidies to address health care costs for participants in the exchanges. The survey also asked voters to what extent they viewed a renewal of ACA subsidies as important, after first pointing out that they are set to expire later in the year triggering rising health care costs – 71 percent of voters said it was important to extend the subsidies. The extension of ACA subsidies was also deemed important by 90 percent of Democrats, 68 percent of independents, and 55 percent of Republicans.
With the passing of the IRA, an extension of three years has been included for ACA subsidies, which will prevent an estimated 2 million people from losing coverage and help millions of others avoid premium increases as they grapple with rising prices on goods and everyday items. Although the Congressional Budget Office has not yet released a final score on the bill, the federal budget cost is about $25 billion per year. Congress has also sought this bill to make prescription drugs more affordable by reducing the price of drugs and limit out-of-pocket costs for many medicare patients. Before the IRA, prescription drugs accounted for about 20 percent of Medicare patients’ out-of-pocket health care costs. Unfortunately, spending on prescription drugs continues to grow as other health spending has decreased. The IRA allows the government, under Medicare, to negotiate prices for 10 drugs with no generic or biosimilar competition starting in 2026, increasing to 20 drugs by 2029. In addition to lowering drug prices, Medicare negotiations are projected to reduce government spending by approximately $100 billion over 10 years. The law also institutes inflation caps in Medicare Part D that limit price increases for drugs year over year. It institutes a $2000 annual cap for beneficiaries’ Part D spending (which has no current cap), starting in 2025. Once this limit is reached, patients would have no cost-sharing requirement. Along with the annual limit, there is a monthly cap meant to smooth patient costs throughout the year.