After more than a year of negotiations, the House and Senate Democrats have advanced some of President Joe Biden's highest policy priorities. The landmark legislation, entitled the Inflation Reduction Act of 2022 (IRA), makes significant changes to tax, climate change and health care policies, while reducing the federal deficit.
The IRA, formally the Build Back Better (BBB) Act, passed the House by a party-line vote of 220 to 207on Friday Aug. 12. This followed passage in the Senate on Aug. 7 by a vote of 51 to 50, with Vice President Kamala Harris casting the tie-breaking vote.
The passage of the bill caps stop-and-start negotiations between Senate Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WV) over the past several months. The BBB included a $1.7 trillion increase in spending and a $1.3 trillion increase in revenues. Several provisions were eliminated from the BBB to get to the IRA, notably, universal preschool, family leave, dental and vision benefits in Medicare, and expansion of Medicaid in non-expansion states. The remaining package results in $739 billion in revenue raised and $433 billion in spending, for a total reduction in deficits of $300 billion over the next 10 years.
The IRA provides roughly $370 billion in investments to address climate change with the goal to cut greenhouse emissions by 40% by the end of the decade. This includes a package of incentives for renewable energies, a production tax credit for nuclear power generators, tax credits for electric and hydrogen vehicles, and subsidies for carbon capture. The IRA also makes several significant changes to the tax code, including a minimum tax on corporations and increased funding for the Internal Revenue Service.
On the health care front, the deal includes a continuation of the Affordable Care Act (ACA) expansion subsidies for three years, allows the Department of Health and Human Services (HHS) secretary to negotiate drug prices in Medicare, and puts a cap of $2,000 on out-of-pocket prescription drug costs for people on Medicare. Additionally, the legislation caps the price of insulin to $35 a month and forces drug companies to offer rebates if prescription prices outpaced inflation in Medicare. Both provisions were slimmed down in scope due to the Senate parliamentarian ruling they could only be applied to Medicare, a government program, but not to private insurance.
Click herefor a in-depth description of the health care policies included in the Inflation Reduction Act of 2022.
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