Payers Praise Inflation Reduction Act, Warn About Pharmaceutical Loopholes

August 09, 2022 - When the Senate passed the Inflation Reduction Act on August 4, 2022, payers and payer organizations met the proposed law with largely positive reactions, though some payer groups pointed out areas that will need improvement.

Most payer organizations chose to focus on the bill’s implications for the Affordable Care Act’s advanced premium tax credits. They praised the law’s efforts to secure the Affordable Care Act subsidies enacted in the American Rescue Plan Act for the next three years. 

“Every American deserves access to affordable coverage and high-quality care, and the Senate’s action will continue vital support that millions of hardworking American families need to purchase their own health coverage in the years to come,” Matt Eyles, president and chief executive officer of AHIP, said in a published statement.

HHS Secretary Xavier Becerra noted that the law is expected to make permanent the subsidies that have lowered premiums for 13 million people on the Affordable Care Act marketplace, saving them on average $800 annually.

“We all have the right to high-quality, affordable health care. As the Secretary of HHS, I am proud that because of the American Rescue Plan and other Biden-Harris Administration efforts, more people than ever before have health insurance coverage,” Becerra said in a press release.

“Today, with Senate passage of the Inflation Reduction Act, we are on the cusp of even more relief for America's families when it comes to affording the health care they rely on and deserve.”

He also mentioned the bill’s impact on Medicare prescription drug prices. The bill sets in place one of the price-controlling strategies that circulated among policymakers for years by allowing Medicare to negotiate drug prices. 

Payers and payer organizations also lauded the law’s implications for Medicare beneficiaries’ healthcare spending. The law also introduces a $2,000 Medicare out-of-pocket healthcare spending prescription drug cap, a move that experts have indicated could support health equity.

However, some payers found that the law did not go far enough. Alliance of Community Health Plans (ACHP) supported additional legislation to reduce the risk of leaving loopholes that pharmaceutical companies could use.

“The drug pricing reforms within this package are a step in the right direction for holding pharmaceutical companies accountable for their egregious pricing practices. However, without provisions to penalize pharmaceutical companies for shifting costs to consumers with private health insurance, pharma has a chance to exploit this loophole and further strain Americans’ wallets,” Ceci Connolly, president and chief executive officer of ACHP, said in an emailed statement.

“The Alliance of Community Health Plans calls on Congress to immediately introduce and move stand-alone legislation to protect consumers and meaningfully improve prescription drug affordability across the health care system.”

ACHP has proposed several methods of reining in prescription drug spending as alternatives, including requiring pharmaceutical companies to justify their prices to the federal government and to pay rebates for price increases that outpace inflation for drugs covered under Medicare Part B and Part D.

The Association for Community Affiliated Plans (ACAP) indicated that the bill was a good first step, but did not see the bill as providing sufficient coverage for certain populations, alluding to the next steps.

“There is more work for Congress and the Administration to do, particularly to strengthen Medicaid and CHIP for children and postpartum individuals, but this is an excellent start,” Margaret A. Murray, chief executive officer of ACAP, said in an emailed statement.

The Inflation Reduction Act was born out of the Build Back Better Act, although the new law incorporates significant changes.

Now that the law has passed in the Senate, the bill will proceed to the House for a vote, where Speaker of the House Nancy Pelosi predicted that representatives intend will move quickly to send the bill to the president.

According to a summary of the law from the Senate Democratic Majority, the Inflation Reduction Act is expected to raise $739 billion and cost S $433 billion, reducing the deficit by $300 billion or more. The Congressional Budget Office and the Joint Committee on Taxation found that extending the American Rescue Act's subsidies would increase the federal deficit by $246.9 billion over the next nine years.