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On the Hill: Senate Passes Inflation Reduction Act

Voting along party lines, the Senate Aug. 7 successfully passed the Inflation Reduction Act of 2022, which would extend Affordable Care Act (ACA) subsidies, allow Medicare to negotiate drug prices, and invest in combating climate change, among other provisions.

The passage of the bill by a 51-50 margin, with Vice President Kamala Harris casting the tie-breaking vote, marks a major win for the Biden administration and congressional Democrats, who have been working to pass a version of this bill for more than 18 months. It now moves to the House, where Speaker Nancy Pelosi (D-Calif.) has announced it will be considered Friday, Aug. 12. In a statement following the Senate vote, America’s Essential Hospitals applauded the bill’s support for access to care but expressed disappointment it lacked funding for hospital workforce and infrastructure needs.

The package was proposed initially as the Build Back Better Act, with the original iteration passing in the House on Nov. 19, 2021, and containing $2.2 trillion in spending. But Democrats hit roadblocks to passing the bill in the Senate when moderate Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) expressed concerns regarding the size and costs of the package, especially considering rising inflation. After months of negotiations between Majority Leader Charles Schumer (D-N.Y.) and Manchin and Sinema, a deal was reached to reduce the federal deficit, reform prescription drug pricing, extend the ACA Advanced Premium Tax Credit (APTC) subsidies for three years, make several tax reform changes, and invest in energy and climate change.

The bill was passed under the congressional reconciliation procedure, a process that requires only a simple majority vote rather than the 60 votes typically needed to overcome a filibuster.

The Inflation Reduction Act

The bill contains notable provisions for essential hospitals, including those that would:

  • establish a Medicare Drug Price Negotiation Program, which directs the secretary of health and human services to negotiate maximum fair prices for select drugs for the Medicare program, beginning with 10 drugs in 2026, up to 15 additional drugs in 2027 and 2028, and up to 20 additional drugs annually in 2029 and beyond;
  • require drug manufacturers to pay a rebate to the Federal Supplementary Medical Insurance Trust Fund for Part B and Part D drugs should they increase prices faster than inflation. In a change required by the Senate parliamentarian, the final bill omitted language that would have extended this provision to commercial health insurance plans; instead, it would apply only to Medicare;
  • cap the monthly cost of insulin furnished under Medicare Part D and remove deductibles and reduce coinsurance for insulin provided through durable medical equipment in Medicare Part B;
  • establish a $2,000 out-of-pocket cap on payments under Medicare Part D and Medicare Advantage Part D (MA-PD) plans in 2025 and beyond;
  • improve access to adult vaccines under Medicare and Medicaid;
  • expand eligibility for low-income subsidies under Part D of the Medicare Program from 135% of the federal poverty line (FPL) to 150% of the FPL, beginning Jan. 1, 2024; and
  • extend ACA APTCs for three years, through 2025.

Congressional Schedule

The House of Representatives and Senate are on recess this week.  However, the House will return to vote on the Inflation Reduction Act on Aug. 12.

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About the Author

Christina Fagnano is the legislative affairs associate at America's Essential Hospitals.

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