Inflation Reduction Act: A Health Care Cost Breakthrough

The Issue

• Commodified Health System Puts Windfall Profit over People. Health care is often denied by a system rigged to generate windfall profits for hospital conglomerates, and Wall Street traded firms in the health insurance, Pharma, and medical device industries (collectively, the Medical Industrial Complex). As a result, the U.S. spends more per person on health care than any other advanced country, and yet leaves millions out altogether while making most feel insecure about their ability to pay for medical care.
• Our Profit-Crazed System Rips Away a Fundamental Freedom. Health care is a fundamental human right which is frequently denied to millions of working and middle class Americans because they are priced out of care. Racial disparities in health care are scandalously high, and are getting worse due to hyperinflation powered by industry greed. As Dr. Martin Luther King, Jr, famously put it: “Of all the forms of inequality, injustice in health is the most shocking and the most inhuman because it often results in physical death.”
• Unaffordable Prices are a Denial of Care. While the uninsured have no way to pay the massive price of medications and medical services, super majorities of working and middle class people with health coverage are avoiding necessary care for fear of running up massive bills they cannot pay. Health care bills continue to be the leading cause of bankruptcy. Seniors and people with chronic conditions often cannot afford the medications they need to live healthy and productive lives.
• Structural Racism is Baked into the System. While the largest number of people denied care and medications are white, people of color are disportionately denied access because they are far more likely to lack coverage because they are denied  access to jobs that provide it. As a result, life expectancy and other health outcomes are color coded in the U.S. Even when BIPOC people have health coverage they have less personal and family wealth to help them cover massive and unexpected medical bills or exorbitant medication costs, and therefore tend to avoid care even more than middle class white people.
• Building the Organizing Strength to Shift Power from the Health Care Industry to the People is the Only Lasting Solution: The government pays 62% of health care costs in the U.S. but allows greedy health care conglomerates to set the price. The only way to force governments to use their regulatory and financial leverage to set a fair price for health services and medications, as every other advanced industrial country does, is to build the immense grassroots power to defeat the health care lobby at the ballot box and in the halls of Congress and state legislatures.

The Inflation Reduction Act is a Historic Health Care Advance

• Health Care Advances are Building Blocks towards System Transformation. The health care provisions meet Citizen Action’s standards for a good compromise because they provide immediate benefits to people struggling under the crushing burden of outrageously high health care prices, benefit marginalized and working class communities the most, and are breakthroughs in the battle to shift power from the Medical Industrial Complex to democratic control.
• Medicare Price Negotiations a Major Breakthrough. Giving Medicare the authority to negotiate prices for the 20 most expensive medications is a major shift in power from Big Pharma to the people. Big Pharma is one of the most powerful lobbies in Congress, and this is their first major defeat in decades. While the provision will only apply to the 20 most expensive medications, and only benefit Medicare beneficiaries, it is a major breach in the firewalls against democratic control put up by the powerful drug lobby.
• Medicare Price Negotiations a Stepping Stone to Bigger Advances. As with the original Social Security and Medicare programs, once a program is created it can be built out in the future if a movement is built to fight for each subsequent advance. The Inflation Reduction Act is a precedent that can be built into Medicare negotiating for all drug prices, price regulation for prescription drug prices outside Medicare, and ultimately Medicare for All if we build the health care social movement to win these future fights.
• Affordable Care Act Premium Subsidies Critical to those without Job-Based Health Coverage. The Senate when it passed the ACA in 2010 made a major mistake, making insurance premiums on the marketplace unaffordable for many working families. The act will immediately extend provisions from President Biden’s American Rescue Plan to keep health coverage accessible and affordable for millions for three additional years. This will protect affordable insurance for approximately 13 million Americans and prevent 3 million Americans from losing their health insurance altogether.
• Insulin Cap also a Breakthrough. The law caps monthly out of pocket costs for insulin on Medicare at $35 both for traditional Medicare and Medicare Advantage. This is another advance which shifts power from the big drug companies to the people.
• Cap on Out of Pocket Drug Costs on Medicare. It protects seniors from Big Pharma price gouging by capping Medicare out-of-pocket costs at $2,000 per year, with the option to break that amount into affordable monthly payments, and provides seniors with free vaccines.
• Limits on Drug Cost Inflation in Medicare. Under this Act, if drug companies raise prices in Medicare faster than the rate of inflation, they must pay rebates back to Medicare for the difference, beginning in October 2022.
• Assistance for Low Income Medicare Recipients on Drug Prices. The Act brings costs down for people with low-incomes by expanding premium and co-pay assistance on prescription drugs, raising the income threshold for the Medicare Part D Low-Income Subsidy Program (LIS).

How to Build Towards More Transformational Health Care Reform

• Democrats Prevented by the Jim Crow-Era Filibuster from Regulating Prescription Drug Costs Outside of Medicare. Because the Senate Parliamentarian decided that private market regulation could not be passed through budget reconciliation, Republicans were able to strip provisions regulating all prescription drug price gouging from the Democratic bill. These included an insulin cap that would apply to the entire market and a prohibition against raising the cost of drugs faster than overall inflation.
• More Grassroots Power is Needed to Gain More. We cannot regulate prescription drug prices outside of Medicare unless we win enough new Senate seats to break the filibuster. Winning the Wisconsin Senate race is critical to overturning the filibuster and returning the Senate to majority. In addition, we need more grassroots power (more organized people working together to build pressure) to force even a larger Senate majority (and a likely smaller House majority) and after that to fuel the grassroots movement the next steps of reform.
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