The inflation-reduction law that President Joe Biden signed this week is expected to keep 44,000 state residents insured in 2023.
The law also caps prescription and insulin costs for certain Medicare users, lowers health insurance premiums and provides expanded financial assistance for certain beneficiaries below the poverty level, according to a report released by the White House on Thursday.
“I think we’re going to have good cooperation from all sectors of the healthcare industry, whether it’s drug manufacturers, insurers, providers, to make this work because at the end of the day we all want the same thing,” said the health minister and US Human Services Xavier Becerra in a conversation Thursday. “We want to make sure Americans are healthy and have access to quality care to stay healthy.”
Health insurance tax credits were originally introduced by the Affordable Care Act and were strengthened by the American Rescue Plan in 2021. The law would extend the tax credits instead of letting them expire.
An HHS report showed that 44,000 Alabamians would lose state health insurance entirely and 24,000 would lose subsidies if those tax credits expire. The Inflation Reduction Act extends premium tax credits through 2025.
Alabamians using a Part D prescription drug plan through Medicare will see “increased financial protection” in 2024, according to the US Health and Human Services report. A $2,000 cap on out-of-pocket prescription costs will go into effect in 2025. HHS wrote that of the 784,000 Alabamians who are Plan D beneficiaries, 22,000 pay more than the $2,000 cap on prescriptions.
In addition, Medicare will be able to negotiate prices for expensive drugs. HHS cited the Kaiser Family Foundation’s estimate that between 5 to 7 million Americans use drugs that would be eligible for negotiation.
The HHS report notes that Americans pay 2-3 times what citizens of other countries pay for prescription drugs. In NiceRx’s 2021 Drug Report, Alabama ranked seventh in the U.S. for highest annual out-of-pocket costs for prescription drugs.
Dr. Meena Seshamani, deputy administrator and director of the Center for Medicare and Medicaid Services, said that as a medical practitioner, she often cares for people who face high prescription costs.
“All of these numbers represent real people with real lives and real problems they’re dealing with. And as a doctor, I took care of these people in my practice and I saw every day the struggles that people had to be able to pay for the drugs they needed to be healthy,” Seshamani said.
She recalled the struggle some patients face, saying some “choose between food on the table and a choice between a prescription” or let health problems persist because they can’t afford medicine.
A long-awaited part of the Inflation Reduction Act is an insulin cap of $35 a month. A report from GoodRx showed that average insulin prices increased 54% nationwide from 2014-2019.
According to the Centers for Disease Control and Prevention, Alabama 12.7% of adults in Alabama have been diagnosed with diabetes, compared to the national average of 9.8%. HHS reported that 63,000 Alabamians on Medicare used insulin in 2020. The new price cap will go into effect in 2023.
The law also provides “supplementary assistance,” or expanded low-income subsidies under Part D, beginning in 2024 for Medicare beneficiaries with incomes up to 150 percent of the poverty level. Currently, beneficiaries between 135-150% receive only partial assistance.
Those who qualify will pay no Part D premium and limited copayments. HHS said 12,000 Alabamians received partial assistance in 2020 and could benefit from the expansion.
Data from the U.S. Census American Community Survey estimates that 15.5 percent of Alabamians of all ages lived below the poverty line in 2019. Of residents 65 and older, the survey estimates that 10.5 % lived below the poverty line.
In 2021, the U.S. Census Bureau reported that the poverty line for a single-person household over the age of 65 was $12,996 and $16,379 for two adults over the age of 65.
The HHS report said the act would continue to reduce premiums by an average of $750 a year for about 219,000 state residents. It would also require drug companies to pay a rebate to Medicare if they increase drug prices faster than inflation, which HHS says will “further reduce out-of-pocket costs for Medicare beneficiaries beginning in 2023.”
The health care changes are just a small part of the 730-page legislation, which also touches on issues such as climate change and taxes. Some Alabama Republicans voiced their disapproval of the Democratic-led bill and criticized the Biden administration after the president signed it into law on Tuesday.
The Kaiser Family Foundation has released a schedule detailing when every health care change from the Inflation Reduction Act will take place through 2029.