Notable changes to the Senate-passed bill
The Inflation Reduction Act will now guarantee that Medicare beneficiaries—more than one-quarter of whom have diabetes—pay no more than $35 per month in out-of-pocket expenses for insulin.
A new 1 percent tax on stock buybacks is now in the bill to help make up for other offsets that were either revised or eliminated.
The Senate bill extends loss limitations originally part of the Tax Cuts and Jobs Act for two additional years.
This fact sheet contains a correction.
The Inflation Reduction Act (IRA) will be a major lifeline for families, seniors, and our planet. The bill takes on some of the most powerful special interests in Washington—Big Pharma, Big Oil, and Wall Street—and delivers meaningful help to the American people. From lowering health care and prescription drug costs to cutting carbon emissions and bolstering production of clean energy, the bill makes historic progress in tackling some of our country’s biggest challenges. It’s a reminder that government, in the right hands, can make a big difference in people’s lives.
Here are 11 important ways that Americans will benefit:
- Allows Medicare to negotiate lower drug prices. The IRA empowers Medicare to negotiate with drug companies so that they can no longer take advantage of Americans, who currently pay 2 to 3 times more for the same drugs than people in other wealthy countries in the Organization for Economic Cooperation and Development (OECD). Allowing the federal government to negotiate drug prices with pharmaceutical companies has been prohibited for nearly 20 years.
- Caps out-of-pocket prescription drug costs for seniors. Medicare beneficiaries receive better financial protection by capping out-of-pocket costs for prescription drugs at $2,000 annually. The cap would save roughly a million seniors about $1,000 each year.
- Prevents higher health care costs. Health coverage will be more affordable for more than 10 million people because the IRA extends enhanced Affordable Care Act (ACA) marketplace subsidies through 2025. The average enrollee will save about $700 per year on premiums. Thanks to the ACA, the uninsured rate is near a record low,* and the subsidy extension will prevent 3 million people from becoming uninsured.
- Cracks down on Big Pharma’s greed. It prevents drug companies from hiking prices above the rate of inflation. This proposal requires drug companies to rebate back the difference if they raise prices higher than inflation.
- Cuts carbon pollution dramatically. With this bill, emissions in 2030 are projected to be 40 percent below peak levels, putting our climate goal of cutting pollution to half of peak levels by the end of the decade within reach.
- Lowers energy costs. Fossil fuels are driving inflation, but the bill helps families switch to cheaper electricity for home heating, cooking, and vehicles—helping Americans cut their utility bills and skip the gas station. The average household will save $500, and even households that don’t make the switch will see lower electricity and natural gas prices. Total spending on oil could go down by nearly 25 percent over the decade. It also would provide middle- and working-class consumers with tax credits for the purchase of clean vehicles that are made in North America.
- Creates American jobs. The bill builds a new clean energy manufacturing economy by investing in refurbishing old factories; building new factories; requiring high wages; and mandating apprenticeship training for companies using clean energy tax credits. The bill will spur domestic production of batteries, solar panels, wind turbines, and more, setting the United States up to compete in the global clean energy economy and creating millions of clean energy jobs.
- Invests in communities that suffer the most from environmental and health hazards. Communities who have experienced dangerous longstanding environmental and health threats will have access to $3 billion in Environmental and Climate Justice Block Grants to cut pollution and improve public health. In all, it will fund $60 billion worth of environmental justice priorities.
- Cracks down on wealthy tax cheats. The lack of adequate enforcement funding led to a massive drop in the rate of audited U.S. households earning $5 million or more per year , plummeting to just 2 percent in 2019 from a rate of over 16 percent in 2010. New funding in this bill will help enforce the tax code more fairly.
- Fixes loopholes that allow wealthy corporations and Wall Street fund managers to avoid paying their fair share in taxes. The bill requires that every corporation with at least $1 billion worth of profits will pay a minimum of 15 percent of their profits in taxes so we will stop having large profitable companies that pay no taxes at all. The bill also fixes a loophole that allows wealthy hedge fund managers to pay a lower tax rate on their income than average working families.
- Cuts inflation and drives down the deficit. The IRA decreases demand through fairer taxes; increases supply through investments in manufacturing and clean energy; and cuts costs for energy, health care, and prescription drugs. Unlike the $1.9 trillion 2017 Republican tax bill, the plan is fully paid for and will decrease the deficit by $300 billion on top of $1.7 trillion in deficit reduction already projected this year.
The IRA would directly impact the bank accounts of everyday Americans making health care, prescription drugs, and energy more affordable while creating jobs, fixing loopholes that benefit Wall Street, reducing pollution, and cutting the deficit. Anyone who says they want to address inflation and lower prices should support this piece of legislation and get it to President Joe Biden’s desk as soon as possible.
* Correction, August 8, 2022: This fact sheet has been updated to clarify that the uninsured rate is at a record low, not record high.