Authored by Maya Nachman, Global and Public Health Sciences '26
Art by Michelle Choi, Human Biology, Health, and Society '25
For decades now, individuals enrolled in Medicare have struggled with high out-of-pocket costs resulting from having to purchase necessary prescription drugs. Bills can quickly pile up leaving patients in debt, and all because the cost of purchasing medication from a pharmacy can reach prices that are far too expensive for lower and middle income individuals to afford.
To combat this, Medicare Part D was introduced in January of 2006 as a way to tackle those high drug prices and the burden they bring. It offers a variety of different coverage plans to help patients with a wide range of medical conditions access their required prescription drugs without any major worry about significant out-of-pocket costs. Additionally, major reforms have recently been made to Medicare Part D, with more projected to be enacted in the upcoming years, as a result of the newly introduced Inflation Reduction Act of 2022. The policy — which President Joe Biden signed into law on August 16, 2022 — will enable Medicare to negotiate drug prices directly with pharmaceutical companies [1]. The bill will also extend the expanded Affordable Care Act program until 2025, and lower the high premiums and out-of-pocket costs that individuals have struggled with throughout recent history. Overall, the Medicare program will gain a lot more strength and influence in the pharmaceutical industry, which will provide additional benefits to those who have Medicare [1].
Over the next ten years, the Inflation Reduction Act of 2022 will also be investing about $300 billion into Deficit Reduction and an additional $369 billion into Energy Security and Climate Change programs. Conserving energy and reducing carbon emissions is a pivotal feature of this bill, ultimately lowering costs for consumers and helping the country to meet target emission reductions in the long-term. In addition, investment in clean energy products will create new jobs in the energy field, ultimately increasing the availability of clean technology, while also creating almost one million new jobs over these next ten years [2]. So what impact does this have on Medicare Part D? Medicare Part D is facing significant reform, as drug prices and out-of-pocket spending costs will be capped. The Congressional Budget Office has estimated that these means of reducing costs will save the government $173 billion through 2031 [3]. There will also be more Medicare advantage plan options. Beginning in 2023, all insulin that is covered by Part D plans will be capped at no more than $35 per month, and every plan that covers insulin will be required to offer one of each insulin dosage form. Additionally, there will be an out-of-pocket cap of $2,000 for all enrollees in Medicare [4].
Not only does this act bring about numerous benefits for Medicare enrollees, but it will also greatly aid small businesses. By lowering prescription drug, healthcare, and energy costs, there is more opportunity for small businesses to start up and thrive without the fear of going uninsured. In addition, small business owners and working families will now have improved access to benefits listed under the tax code. Small businesses can receive a tax credit that covers 30% of the cost of converting their establishments to affordable solar power. This will decrease operating costs and provide protection from extravagant energy prices [5].
Ultimately, the potential positive advancements that appear to be implemented in this newly passed bill are clear, and the immediate impact it has already had serves as early evidence of this. By reducing prescription drug prices for lower income families enrolled in Medicare, providing opportunities for increase in income in the business sector a large portion of this demographic relies on, and generating greater opportunity for innovation and new business startups, this act holistically and comprehensively is a step in the right direction towards lessening the burden on middle and lower income individuals.
Works Cited
SUMMARY: THE INFLATION REDUCTION ACT OF 2022. (2022). https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_one_page_summary.pdf
Sahay, R. (2022, November 2). How the US Inflation Reduction Act will impact the economy. World Economic Forum. https://www.weforum.org/agenda/2022/11/how-new-laws-meet-climate-goals/
McKinsey & Company. (2022, October 24). IRA: The Inflation Reduction Act by the numbers | McKinsey. Www.mckinsey.com. https://www.mckinsey.com/industries/public-and-social-sector/our-insights/the-inflation-reduction-act-heres-whats-in-it
How Changes to Medicare Part D Will Impact Federal Annuitants. (n.d.). Government Executive. Retrieved April 25, 2023, from https://www.govexec.com/pay-benefits/2023/03/medicare-part-d-changes-federal-annuitants/383469/
House, T. W. (2022, September 13). FACT SHEET: How the Inflation Reduction Act Will Help Small Businesses. The White House. https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/12/fact-sheet-how-the-inflation-reduction-act-will-help-small-businesses/