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What Nurses Should Know About the Inflation Reduction Act

Ann Feeney, CAE
Updated August 17, 2022
    The Inflation Reduction Act is a major Congressional healthcare deal. Learn about the climate, healthcare, and tax bill and how it may affect nursing and healthcare.
    Credit: AFP via Getty Images
    • The recent climate, healthcare, and tax bill, now known as the Inflation Reduction Act, was signed into law on August 16, 2022. It is designed to reduce healthcare costs for Medicare and its consumers.
    • Medicare will now be able to negotiate drug prices for some drugs. Those using Medicare Part D will have their drug spending capped at $2,000 annually. Insulin costs of Medicare participants are capped at $35 monthly, and the act extends subsidies for the Affordable Care Act (ACA) for an additional three years.
    • This is projected to reduce out-of-pocket and governmental costs for healthcare, but the pharmaceutical industry claims that it will reduce innovation and the number of drugs brought to market.

    The Inflation Reduction Act is a climate, healthcare, and tax bill that both the House and the Senate passed. It represents one of the biggest healthcare deals since the Affordable Care Act, and it is one of the few successful attempts at legislation to control pharmaceutical pricing.

    This article explains the implications of the climate, healthcare, and tax bill on healthcare and for nurses. Discover how the healthcare deal may affect your work as a nurse.

    5 Ways the Inflation Reduction Act Will Impact Nurses and Healthcare

    The Inflation Reduction Act does not contain any legislation that directly addresses nurses or nursing, but it does have wide-ranging impacts on the healthcare system and potentially on population health.

    This act focuses on providing resources for people to prevent conditions from worsening. If more people can afford health insurance and prescription drugs, fewer cases of treatable conditions will turn into untreatable or more expensive conditions.

    A breakdown of the act’s takeaways can prepare nurses to educate their patients on these changes in the healthcare system.

    1 Continued ACA Subsidies

    According to the Inflation Reduction Act, the federal government will continue to subsidize ACA enrollment at its previous levels. This extension of the ACA subsidies will keep around seven million Americans covered during the next three years.

    For nurses, this is more of a continuation of the status quo than a change.

    2 Insulin Price Caps for Medicare

    Medicare consumers will pay no more than $35 per month on insulin because of the act. About 25% of Americans with Type 1 diabetes have rationed their insulin intake because of costs; this can have serious health consequences, including death.

    This price cap on insulin may lead to better population health among Medicare users.

    3 $2,000 Cap on Out-of-Pocket Drug Costs for Medicare Part D

    Medicare consumers enrolled in Medicare Part D will have their out-of-pocket costs capped at $2,000. This, like the insulin price caps, is designed to reduce the level of drug rationing or patients not even filling expensive prescriptions.

    4 Penalties for Increasing Medication Prices Above Inflation

    The act states that if drug companies raise the prices of drugs beyond the rate of inflation, they will pay rebates to the government. The full impact of this change is not clear and will likely vary based on the manufacturer and drug. But the intent is to limit excessive price increases, which would also likely reduce rationing or unfilled prescriptions.

    5 Medicare Ability to Negotiate Some Drug Prices

    This provision of the act gives Medicare the authority to negotiate drug prices for the first time. It allows Medicare to negotiate certain high-cost drugs that have been available for at least nine years. Over the longer term, Medicare’s ability to negotiate drug prices may help to control the price of drug spending. However, the impact may be limited.

    Medicare won’t be able to negotiate the prices until 2026. This applies to a few older drugs (10-20, according to most estimates) that have been on the market at least nine years.

    Drug companies have said that even so, the loss of revenue from this and penalties for higher costs will lead to less innovation and fewer new drugs coming to market. Some financial analysts, though, project minimal impact on growth in the pharmaceutical industry.

    3 Takeaways From Passing the Climate, Healthcare, and Tax Bill

    In addition, there are two more speculative possibilities. If the act leads to future healthcare deals or reduces the impact of climate change, it could have an even broader impact on health.

    The following are three key takeaways nurses should know about.

    1 Possible Precedents

    The climate, healthcare, and tax bill, also known as the Inflation Reduction Act, sets precedents for further legislation. Some elements of the act are much smaller in scope than in the original Build Back Better Act, which met too much Senate opposition to pass.

    However, some of these could be expanded in future healthcare deals if they show a measurable impact. For example, the original act would have included insulin price caps for all consumers, not just Medicare consumers. If the act results in significant savings for Medicare or better health outcomes, future legislation may include an expanded cap.

    2 Climate and Health

    The act includes several measures intended to reduce carbon emissions and support nonpolluting energy, such as subsidies for electric vehicles and solar panels.

    The potential health impacts of a warming, more extreme climate include:

    • More spread of diseases that were formerly considered tropical
    • More respiratory and cardiovascular diseases
    • More food insecurity caused by droughts and smaller harvests
    • Mental health impacts
    • Injuries from extreme weather events

    If the act reduces these impacts or health conditions related to pollution, it can help avoid an already strained healthcare system from being overwhelmed.

    It would be difficult to measure the role of the act in reducing pollution, since there are so many variables, but it could have a profound impact.

    3 Drug Innovation and Drug Spending

    The goal of the act is to reduce the cost of healthcare to Medicare and consumers. However, the full impact of the Inflation Reduction Act on healthcare as a whole and on the pharmaceutical industry is not clear.

    Many industry advocates claim that cost-containment measures will dramatically reduce the industry’s ability to innovate and that this will cost more lives in the long term. Supporters of the act claim that the impact would be limited.

    Since no model can predict with perfect accuracy, only time will tell what the full result will be.