Lower premiums, insulin price caps and more. How the health care provisions of the Biden law will affect you

The new climate change law also includes several provisions designed to reduce health care costs.

In fact, government savings due to Medicare drug pricing are expected to total $265 billion, the largest revenue source in the bill signed by President Joe Biden earlier this week. Older Americans who get Medicare will pay less for many drugs.

So what does this mean for New Jersey?

Both the White House and congressional Democrats, who won control of the House in 2018 after promising to cut health care costs, celebrated the bill’s passage against unanimous opposition from all Republicans in the House and Senate.

“This is a historic piece of legislation,” Health and Human Services Secretary Xavier Becerra said Thursday during a conference call with Washington-based reporters from local news organizations, including NJ Advance Media.

Here’s how the new law will affect New Jersey, according to the White House:

Negotiate drug prices

At the center of the new health care portion of the law is allowing the federal government to negotiate the prices of a number of prescription drugs for the first time. A small group of drugs that do not have generic equivalents account for the majority of Medicare spending, according to the Kaiser Family Foundation.

For example, 7 percent of all drugs covered by the Part D prescription drug program account for 60 percent of costs, and 8.5 percent of drugs covered by Part B account for 80 percent of that program’s costs, according to Kaiser.

Price negotiations will be limited to 10 drugs in 2026, with the number increasing in subsequent years.

There are 1.2 million New Jersey residents enrolled in Medicare Part D, which congressional Republicans barred from negotiating lower prices when they passed drug benefits in 2003.

The passage of this latest law marked a rare defeat for the powerful drug lobby, the Pharmaceutical Research and Manufacturers of America.

“The president signed a law that will lead to fewer new treatments and doesn’t do enough to address the real affordability issues facing pharmacy patients,” said Stephen J. Ubl, president and CEO of a pharmaceutical industry trade group. “We will explore every opportunity to mitigate the harmful impacts of the unprecedented government price-fixing system enacted by this law.”


Starting in 2023, Medicare recipients will pay no more than $35 a month for insulin. About 77,000 New Jersey residents receiving Medicare used insulin in 2020.

Senate Republicans have blocked an effort to extend the cap on insulin prices to those with private insurance.

Limiting out-of-pocket costs

Medicare recipients will pay no more than $2,000 a year in out-of-pocket costs under the Part D prescription drug program starting in 2025. According to the Kaiser Family Foundation, 45,540 New Jersey residents currently have costs above the cap.

Drug pricing

To contain drug costs, companies that raise their prices faster than inflation will have to pay a rebate to Medicare starting in 2023.

Medicare drug subsidies

Low-income Medicare recipients who earn up to 150 percent of the poverty line will be eligible for additional subsidies under Part D, the prescription drug plan, starting in 2024. Currently, only partial subsidies are available to those with incomes between 135% and 150% of the poverty line. This would provide full subsidies for an additional 10,455 New Jersey residents enrolled in Medicare.

Health premiums

The coronavirus stimulus law includes additional subsidies to reduce premiums for those who buy health insurance through the Affordable Care Act. Those subsidies, which were supposed to expire this year, will now roll through 2025. New Jersey now has its own marketplace, getcoverednj, to sell policies.

That represents hundreds of dollars in annual savings for about 292,000 New Jersey residents, whose premiums will now be capped at 8.5 percent of income.

In New Jersey, 60,000 small business owners and self-employed adults get health insurance through the ACA.

Insurance coverage

The White House estimated that 67,000 more New Jersey residents would sign up for insurance thanks to the lower cost of getting coverage.


While the coronavirus vaccine and others such as the flu vaccine are already fully covered under Medicare Part B, other vaccines are covered by the Part D prescription drug program, meaning some recipients may have copayments. No longer. Starting next year, all vaccines that are part of Medicare Part D will be free. There were 88,860 Medicare beneficiaries in New Jersey who received a Part D vaccine in 2020.

The Kaiser Family Foundation said Medicaid recipients would also be eligible for additional help paying for many vaccines.

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Jonathan D. Salant can be reached at [email protected]. Follow him on @JDSalant.

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