Xavier Becerra United States Secretary of Health and Human Services | Official Website
On August 16, 2024, the Biden-Harris Administration marked the second anniversary of the Inflation Reduction Act, a law aimed at reducing prescription drug costs and making health insurance more affordable for Americans. Signed into law two years ago by President Biden, this legislation introduced significant changes to Medicare and the Affordable Care Act (ACA).
The act established an annual cap on out-of-pocket drug costs for Medicare beneficiaries, set a $35 monthly cap on insulin prices, allowed Medicare to negotiate drug prices directly, and made ACA marketplace plans more affordable. As a result, the uninsured rate in the United States has reached its lowest level in history.
"Two years in, the Inflation Reduction Act is lowering health care costs for millions of Americans," said U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra. "As a result of this law, we’ve achieved something decades in the making: putting Medicare on a level playing field by negotiating for lower drug prices."
Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure highlighted the benefits already being experienced by millions of Americans. "Millions are already benefiting from lower drug costs through a cap on insulin costs, free recommended vaccines, more financial assistance, and a cap on costs for Medicare enrollees with high drug costs," she stated.
Recently, new lower prices were announced for ten drugs as part of the first cycle of negotiations under the new Medicare Drug Price Negotiation Program. If these prices had been in effect last year, Medicare would have saved approximately $6 billion across these drugs.
Several provisions have taken effect over the past two years:
- The cost of each covered insulin product is capped at $35 per month.
- Recommended vaccines are provided free to people with Medicare Part D.
- Out-of-pocket drug costs for some Medicare enrollees are capped at about $3,500 in 2024.
- Eligibility for the Low-Income Subsidy program has been expanded.
- Drug companies must pay rebates to Medicare if they raise their prices faster than inflation.
By 2025, out-of-pocket costs for all individuals enrolled in Medicare prescription drug coverage will be capped at $2,000 annually. Additionally, CMS will select up to 15 more negotiation-eligible drugs next year.
The act has also led to record levels of health insurance coverage in America. More than 300 million Americans now have health coverage; this year alone saw 21.4 million sign-ups through ACA marketplaces due to enhanced subsidies provided by the act.
However, these enhanced ACA subsidies are set to expire at the end of 2025 unless Congress acts to make them permanent.
For further information about how the Inflation Reduction Act is impacting seniors and people with disabilities on Medicare or details about new negotiated drug prices under Medicare's program visit LowerDrugCosts.gov or MedicamentosBajoPrecio.gov.
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