On Tuesday, President Joe Biden signed a $740 billion package into law that enacts some of the biggest changes to US health care since the passage of the Affordable Care Act more than a decade ago.
The Inflation Reduction Act allows Medicare to negotiate drug prices starting in 2026, limits out-of-pocket spending on Medicare Part D, caps insulin copayments for Medicare beneficiaries at $35 per month, and extends expanded subsidies for health insurance plans of the ACA to lower income beneficiaries three more years.
Patient advocacy groups cheered the new law, with Families USA Executive Director Frederick Isasi calling it a The David and Goliath moment for taking over the government for Big Pharma that, amid persistently high inflation, “couldn’t have come at a better time” for patients.
Payer and hospital groups were also pleased with the continuation of the ACA’s expanded subsidies, which increase financial assistance for people who were already eligible and also expand subsidies for middle-income individuals who may have previously been with price out of coverage.
The subsidies, which will result in about 13 million people saving $800 a year for their health insurance, should result in less drag on payer rolls in the ACA marketplaces and more stable revenue over the next few years for insurers. Meanwhile, hospitals are likely to benefit from more patients remaining in ACA plans, which tend to be reimbursed at a higher level than other publicly sponsored coverage like Medicaid.
“The bottom line is that we are pleased to see this bill become law,” Margaret Murray, CEO of the Association for Community Plans, which represents more than 70 publicly sponsored plans, said in a statement.
However, hospital groups cited labor shortages, rising labor costs and supply chain issues to ask the government for additional financial help, signaling the industry’s lobbying battle is not over for the year.
“While the Inflation Reduction Act does much to ensure access to care, it does not provide the support essential hospitals need as frontline providers during public health crises,” said Bruce Seigel, CEO of America’s Essential Hospitals. “We call on Congress to provide more funding to overcome these challenges.”
Major for-profit hospital operators reported declines in net income in the second quarter as admissions fell year over year and the cost of patient care rose.
Among the macro headwinds, the 2% Medicare sequestration cuts that had been put on hold due to the COVID-19 pandemic took effect last month, and another 4% is scheduled to kick in at the end of the year unless Congress moves to delay it. The providers have also called on the government to increase in reimbursement rates in proposed 2023 payment rules that they say are too low to work in today’s complex operational environment.
The IRA appeared dead in the Senate until late last month, when Democrats announced a surprise deal with Sen. Joe Manchin, DW.Va., to push the bill across the finish line.