President Biden recently delivered a speech at the White House Rose Garden about the health benefits of the Inflation Reduction Act. During the speech, he hailed this groundbreaking legislation as a major economic victory for working families and the private sector.
Small business owners have often cited rising healthcare costs and prescription drug prices as the number one concern for the future of their business. In fact, a recent questionnaire found that 83% of small business owners said rising health insurance policies were impacting their business. Fortunately, the Inflation Reduction Act contains crucial provisions to address health care costs. Here are three ways the Inflation Reduction Act can affect health care costs that are important to employers:
1. Improved Health Insurance Premium Tax Credits: Many small employers cannot afford to offer themselves or their employees health insurance. Many of them take advantage of the health insurance market (healthcare.gov) to access health insurance. The good news is that major tax credits that cut monthly premium spending and make health insurance on the Affordable Care Act (ACA) Marketplace more affordable for millions of Americans are set to expire, but the Inflation Reduction Act bill extends them for the next three years. , through 2025. In total, about 13 million Americans will save an average of $800 a year, compared to what they would pay without the Inflation Reduction Act. Not only will this help entrepreneurs free up business owners to access capital, it will also give them more opportunities to grow and be more competitive. Both small employers and employees can find more information at: www.healthcare.gov.
2. Negotiating Medicare drug prices: The legislation requires the Secretary of the Department of Health and Human Services (HHS) to negotiate prices for 10 of the drugs covered by Medicare. While these 10 drugs are yet to be determined by HHS, Brian Deese, director of the National Economic Council, said in a recent interview that “Medicare needs to negotiate better prices for prescription drugs, because when we do, we don’t just lower the costs to consumers for whom prescription drugs can make up a significant portion of their monthly budget, but we are also reducing costs to the federal government.”
3. Capping Medicare Drug Costs: The Inflation Reduction Act covers out-of-pocket prescription drug costs for Medicare Part D beneficiaries at $2,000 per year. There is currently no cash cap on Medicare Part D beneficiaries, so once a person reaches the “catastrophic phase” of $7,050 in annual out-of-pocket costs for covered medications, they may have to pay 5% of the cost of their medications going forward. This can amount to many thousands of dollars per year. By setting this limit, the law protects these individuals from paying for prescription drugs above the limit, saving them money that can be funneled into entrepreneurship or other living expenses. In addition, the legislation limits the out-of-pocket cost in Medicare Part D for insulin to $35, which will be very helpful for the 1.6 million to 3.3 million Medicare beneficiaries who use insulin.
Access to healthcare and costs remain a constant challenge for US employers, especially for small and medium-sized employers. While the steps outlined above may be helpful in lowering costs across the market and will help many consumers, there is still more work to be done. For example, limits on the price of insulin outside the Medicare program were ultimately not included in the Inflation Reduction Act. However, President Biden reiterated his commitment to continue to fight for this common sense policy to save Americans who rely on insulin for hundreds or thousands of dollars a year for that life-saving treatment, saying, “We’re going to come back to this, and we’re going to get the reduce the cost of life-saving insulin for children and families for everyone, whether they use Medicare or not.”