Inflation Reduction Act becomes law: Impacts on healthcare, climate change

The Inflation Reduction Act was signed into United States law by President Joe Biden on Tuesday.

The law will provide many benefits for all Americans, including Virginians by lowering prescription costs through Medicare for seniors and people with disabilities, and establishing a $2,000 cap on out-of-pocket costs for prescription drugs for seniors covered under Medicare Part D. According to a press release, more than 36,000 Virginians with Medicare Part D spent more than $2,000 out-of-pocket on their prescription drugs in 2020.

The Inflation Reduction Act expands the Low-Income Subsidy program, which helps cover prescription drug costs for more than 11,000 low-income Virginias with Medicare. The legislation will provide free coverage for vaccines under Medicare Part D and improve access to vaccines under Medicaid and the Children’s Health Insurance Program (CHIP). The press release stated that in 2020 nearly 85,000 Virginian received a vaccine covered under Medicare Part D.

Congress enhanced subsidies under the Affordable Care Act (ACAO during the pandemic to lower health care premiums for Americans. The Inflation Reduction Act will extend these subsidies through 2025 to help make health insurance more affordable for Virginians. More than 300,000 Virginians have ACA coverage in 2022. The Center for Medicare & Medicaid Services (CMS) estimated Virginians with ACA insurance would have seen a $71 increase in their monthly premiums for the next coverage year if these subsidies were not extended.

The legislation permanently extends the Black Lung Disability Trust Fund excise tax at a higher rate, which provides more certainty for miners, miner retirees, and their families. Thousands of miners and their families rely on these benefits in Virginia, including approximately 2,600 last year alone.

Carbon emissions will be reduced by roughly 40 percent by 2030 with the new legislation. The law incentivizes investment in and production of renewable energy technologies like solar power and the Coastal Virginia Offshore Wind project, and expands the 48C investment tax credit for clean energy manufacturers, with $4 billion reserved for use exclusively in coal communities. All clean energy tax credits include a bonus for meeting domestic manufacturing requirements related to steel, iron, or other manufactured components. The law also expands tax credits for residential clean energy and home efficiency improvements.

Nearly 1 million jobs per year will be created through the clean energy provisions of the legislation. Tax credits for clean medium and heavy duty trucks are included, as well as a $7,500 consumer credit for the purchase of new electric vehicles and incentives if vehicles are produced in North America. Financial assistance for rural electric cooperatives to improve resilience and affordability are $9.7 billion. The law includes $2 billion for the USDA Rural Energy for America Program to provide competitive grants and loan guarantees to farmers, ranchers, and rural small businesses for renewable energy systems or energy efficiency improvements. Farmers and ranchers who adopt agriculture conservation practices to improve landscape resilience will be assisted with $20 billion.

Lastly, the Inflation Reduction Act takes steps to make sure that the largest corporations and wealthiest Americans pay their fair share in taxes, without increasing taxes on small businesses or families making less than $400,000 a year. The legislation also provides funding to modernize Internal Revenue Service (IRS) systems and improve customer service when paying taxes to help ensure quicky process of tax returns, faster rebates to taxpayers, and address challenges Americans have when filing taxes.

“We’re proud that this law will lower the price of prescription drugs, reduce the deficit, bring down energy bills and fight climate change,” Virginia U.S. Sens. Mark R. Warner and Tim Kaine said in the press release. “We’re also glad that it will help ensure that miners suffering from black lung and their families get the care and benefits they deserve. We will continue to look for ways to support the health and well-being of our communities, decrease inflation and lower costs for Virginians.”