With President Joe Biden signing the Inflation Reduction Act into law on Tuesday, advocates of the law are touting the benefits that Marylanders will eventually see from cheaper prescription drugs, home energy assistance and policies to combat climate change.
The bill commits the government to spending hundreds of billions of dollars on programs related to health care and clean energy, but it also would raise money by setting a minimum corporate tax and other changes. All told, officials estimate the bill to have a net reduction on the federal deficit of at least $300 billion.
Before putting his signature on the Inflation Reduction Act, Biden said the legislation is “about delivering progress and prosperity to American families.” He called the measure “one of the most significant laws in our history.”
“We are just so excited about all this,” U.S. Sen. Benjamin L. Cardin said at an event promoting the legislation last week. “It’s going to take a long time to understand everything that’s in this bill because there’s a lot in this bill.”
Here’s a look at some of the provisions of the Inflation Reduction Act of interest to Marylanders.
Vinny DeMarco, a longtime Maryland-based advocate for lower-cost healthcare, said the Inflation Reduction Act is a huge step forward toward affordability.
The Inflation Reduction Act has specific benefits for seniors who have Medicare health coverage, as well as those who buy health insurance through the state exchanges set up under the Affordable Care Act.
For the first time, Medicare will be able to negotiate the price of prescription drugs used by seniors, which was expressly prohibited before — the result of pharmaceutical industry lobbying, DeMarco said.
“Joe Biden is the first president ever to take on pharma and beat them,” he said.
The Medicare-negotiated drug prices could be used by a new state panel that will set maximum prices for drugs for state and local government workers. DeMarco and others hope to expand the panel’s authority to cover prescriptions provided through all insurance plans in Maryland.
Older adults on Medicare also will see caps on their out-of-pocket drug costs phased in, eventually reaching a $2,000 annual cap in 2025. The cost of insulin, used by people with diabetes, will be capped at $35 per month.
The Inflation Reduction Act also extends for three more years changes to the health exchange for people who buy their own health insurance, expanding the subsidies that bring down the cost and expanding the number of people eligible for the subsidies.
“This is one of the most important laws Congress has passed since the 1960s, when you combine the climate and Rx and health coverage,” DeMarco said. “It is an incredible piece of legislation.”
More than 1 million Marylanders get their health care through Medicare, according to Hank Greenberg, state director of the AARP.
Medicare members typically pay more than $4,500 per year for prescription drugs, so the caps on drug costs are particularly meaningful, Greenberg said.
“This is going to go a long way to lower drug prices and out-of-pocket costs, particularly for those on Medicare,” Greenberg said.
Climate change and the environment
The Inflation Reduction Act includes several provisions to promote energy efficiency and combat climate change.
U.S. Sen. Chris Van Hollen and U.S. Rep. Kweisi Mfume, both Democrats, were in Canton on Monday to tout part of the bill that gives rebates to homeowners who make energy-efficient upgrades to their homes. This provision of the bill incorporated elements of legislation he sponsored called “HOPE for HOMES.”
Van Hollen said there are “tremendous savings” in using energy more efficiently.
“But the biggest impediment to a homeowner making improvements in their home to improve their energy efficiency is that up-front cost,” he said. “Because the up-front costs they see — and the savings are over a period of time.”
Under the Inflation Reduction Act, many homeowners will be eligible to recoup up to 50% of energy improvement costs — up to a maximum rebate of $4,000. Lower-income homeowners could be eligible for more generous rebates of up to 80% of costs, a maximum of $8,000.
Van Hollen and Mfume, both Democrats, spoke outside the headquarters of the Green & Healthy Homes Initiative, a nonprofit that helps homeowners make improvements to their homes.
“This amazing act … will allow us to put money into energy efficiency and to weatherization, into job training, into health, protecting our seniors and ensuring that we address climate change as a pathway of restorative justice to our historically disinvested communities,” said Ruth Ann Norton, president and CEO of the Green & Healthy Homes Initiative.
“Today is a day to celebrate equity and to celebrate health,” she said.
Other climate and energy provisions of the Inflation Reduction Act include more generous tax credits for buying new and used electric cars; tax credits for building facilities that manufacture green energy products such as wind turbines and solar panels; grants for renovating auto plants to make clean energy vehicles; grants to reduce pollution from maritime ports, such as the Port of Baltimore; money for conserving coastal habitats; and money for cleaner heavy-duty vehicles including school buses, transit buses and trash trucks.
Cardin noted that the bill includes money for cover crops on farms in the Chesapeake Bay watershed as well as programs for managing flood plains.
“Passing the Inflation Reduction Act is a monumental step to put the U.S. on track towards addressing the climate crisis,” said Ramón Palencia-Calvo, deputy executive director of the Maryland League of Conservation Voters.
Combined with a state-level climate bill passed earlier this year, “2022 is turning out to be a banner year for climate action in Maryland,” he said.