Understanding the Health Care Provisions in the Inflation Reduction Act

Kaiser Family Foundation

The House is expected to take up the Senate-passed Inflation Reduction Act later this week, a sweeping bill that includes several landmark health care provisions that would lower prescription drug costs for people with Medicare, reduce Medicare drug spending and extend enhanced subsidies for Affordable Care Act marketplace coverage.

KFF experts held a web briefing to explain these provisions and how they would affect people and federal health spending, followed by a Question and Answer session.

The legislation for the first time would require the U.S. Secretary of Health and Human Services to negotiate directly with drug manufacturers over the price of some high-cost drugs in the Medicare program. It also would require drug companies to pay a rebate to the government if prices rise faster than inflation based on drug use by Medicare beneficiaries, cap overall out-of-pocket drug costs for people with Medicare at $2,000 a year, and limit Medicare beneficiaries’ out-of-pocket spending on insulin products covered by their Medicare Part D plan to $35 per month.

Although the Senate passed legislation on a party-line vote, with all Republicans opposing it, past KFF polling shows that these prescription drug proposals enjoy broad public support.

The bill also would extend for three years the enhanced ACA subsidies that Congress passed last year as part of the American Rescue Plan Act. That temporary boost increased the amount of financial help available to people already eligible to buy subsidized health plans in the ACA Marketplaces, and expanded subsidies to more middle-income people, many of whom were previously priced out of coverage. 

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