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On August 16, President Joe Biden signed the Inflation Reduction Act of 2022 (IRA 2022) into law after it was passed by Congress four days prior. The newly minted budget reconciliation bill aims to address the rising costs of inflation by reducing the federal budget deficit, lowering prescription drug prices and investing in domestic clean energy production.
The new federal policy came after a months-long effort by Democrats to address the rising prices across the economy which were limiting Americans’ ability to stretch the purchasing power of their everyday dollar
“The Inflation Reduction Act will help Americans save money on prescription drugs, health premiums, and much more,” said President Biden in a statement on August 4. “It will make our tax system more fair by making corporations pay a minimum tax.”
This landmark bill is the successor of last year’s Build Back Better Act (BBB), which strove to invest $1.7 trillion in social policy programs by lowering the cost of education and healthcare, expanding the child tax credit and funding a clean energy economy.
What does the Inflation Reduction Act mean for Michiganders?
As millions across the country suffer under the hefty costs of inflation, the new federal policy plans to alleviate costs in healthcare and investments in long-term green energy savings.
The White House released a “by the numbers” plan on how the new law will impact Americans.
The law aims to address recent estimates of the national uninsured rate which hang at “an all-time low” of 8 percent.
Regarding health insurance costs, “5.7 million Medicare beneficiaries could see their prescription drug costs go down because of the provision allowing Medicare to negotiate prescription drug costs.”
The Inflation Reduction Act will go to bat against special interest lobby groups, such as the pharmaceutical industry, which has spent a reported $187 million on lobbying Congress this year alone.
Once enacted, the plan promises to provide relief to 13 million Americans by providing an annual savings of $800 on health insurance premiums.
For the 50 million people with Medicare Part D, their costs at the pharmacy are capped at $2,000 per year, which the statement notes will directly benefit 1.4 million beneficiaries each year.
In 2020, Governor Gretchen Whitmer’s Prescription Drug Taskforce released a report stating, “Prices for the most commonly prescribed drugs for older patients have increased at more than 10 times the rate of inflation within five years, and the average cost of prescription drugs increased nearly 60 percent between 2012 and 2017, while Michiganders’ incomes have increased only 11 percent.”
The report found Michigan residents are affected by the high cost of prescription drugs more than other states, citing 2019 data from the IQVIA Nation Prescription Audit ranking Michigan as the 14th among 50 states and D.C. with $1,914 per capita prescription drug spending.
The Michigan Chronicle spoke with Wally Abdallah, PharmD, pharmacist at the newest PharMor store on Detroit’s westside, one of the 20 stores of the independently-owned chain in the metro Detroit area.
“Most people here qualify for Medicare and Medicaid, so they don’t have that much of a [prescription] copay,” said Abdallah.
“But those who don’t qualify for Medicaid, that definitely will help. And for those who qualify for Medicare, they have a gap, they call it, so you have to pay sometimes hundreds of dollars before Medicare starts covering the whole thing. So, this [law] will definitely help, because some people are already paying $300 to $400 for a prescription.”
Combatting Climate Change
The IRA 2022 is the largest investment in climate change in U.S. history, amounting to between $40 to $60 billion.
The White House released details of how the law will deliver affordable clean energy in every state.
In the policy plan for Michigan, the IRA 2022 is geared to “make it more affordable for Michigan families to purchase energy efficient appliances when they need to, make repairs around their homes and save money on their utility bills each month.”
These savings include eligible rebates for low- and moderate-income households for installing new electric appliances, energy efficient home repairs and tax credits for installing single family and community solar projects.
Grants to help state and local governments will also be provided to adopt the latest building energy codes, resulting in a 10.7 percent cost savings to the average new homeowner’s utility bill.
The investment in sustainable energy infrastructure will expand employment opportunities to the 119,853 Michigan workers already employed in clean energy jobs and 583,700 manufacturing workers as of 2021.
Other incentives include tax credits for small businesses, support for transportation projects in the face of “intensifying extreme weather,” more affordable options to purchase electric vehicles, and efforts to reduce pollution by lowering gas emissions and fund local and state green banks, like Michigan Saves.
Congresswoman Rashida Tlaib (MI-13) released a statement of support on the day the Inflation Reduction Act passed the U.S. House of Representatives.
“While this bill delivers essential lowered costs on prescription drugs and health care, some affordability on insulin costs, and makes major investments in the clean, renewable energy we must rapidly transition to, I cannot take today’s yes vote on the IRA lightly,” said Tlaib.