TL/DR –
The Inflation Reduction Act is expected to dramatically reduce healthcare costs for American seniors, particularly for prescription drugs. The legislation has capped out-of-pocket prescriptions at $2,000 for Medicare patients and made the shingles vaccine and insulin more affordable. The changes are funded by ensuring large American corporations pay a minimum corporate tax of 15%.
US Seniors See Significant Reduction in Prescription Drug Costs
With the price of prescription drugs and other health care expenses being a significant concern for many senior citizens in the U.S., the Inflation Reduction Act brings a sigh of relief with lowered costs. This is especially beneficial for patients grappling with diseases like cancer or heart conditions.
Previously, numerous Americans on Medicare were paying over $14,000 annually for blood cancer drugs, over $10,000 for ovarian cancer drugs, and over $9,000 for breast cancer drugs. Thanks to the Biden administration, these out-of-pocket costs were capped at $3,500 in 2023, and further reduced to a maximum of $2,000 in 2024.
“The American people won, and Big Pharma lost,” declared President Biden after the legislation was passed in September 2022.
The cost of the shingles vaccine, commonly skipped by seniors due to its price, is now free. More than two million seniors paid between $100 and $200 for this vaccine in 2022, but Medicare prescription drug plans have since reduced the cost to zero.
Diabetes patients of all ages also benefit from the legislation. The cost of life-saving insulin was capped at $35 per month.
Medicare also lowered the costs of Part B premiums, which covers outpatient doctor visits, saving 15 million Americans an average of $800 per year on health insurance costs.
In a historical first, Medicare began negotiating fair drug prices using its large patient pool as leverage, no longer accepting the high prices demanded by pharmaceutical companies. The drugs selected for price negotiation were some of the most expensive and widely used ones.
These price reductions not only save seniors money but also help in reducing the federal budget deficits by hundreds of billions of dollars.
Funding the Cost-Savings
The cost-savings have been made possible by ensuring the biggest corporations in America pay their fair share of federal taxes. From 2023, U.S. corporations were required to pay a minimum corporate tax of 15 percent.
The Inflation Reduction Act established the CAMT, imposing this minimum tax on any corporation with an average income exceeding $1 billion.
The last three years have seen several positive developments in health care cost reductions.
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