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3 Ways The Biden Inflation Bill Might Lower Your Costs – Forbes

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President Joe Biden’s new bill promises to low…….

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.

President Joe Biden’s new bill promises to lower costs for Americans—but the savings may not be as widespread as you’re hoping.

With inflation topping 8.5%, the Inflation Reduction Act does little to move its needle on inflation immediately; the Congressional Budget Office (CBO) found that it will have little impact on lowering the prices of most goods and services.

But the bill may accomplish significant health care system reforms, and it makes historic investments to fight climate change.

As a result, Americans may see relief from things like prescription drugs and energy costs—though most of the benefits won’t be felt immediately.

3 Ways the Inflation Reduction Act Will Lower Costs for Some Americans

1. Lower Drug Costs

The bill has multiple provisions aimed at lowering drug costs for Americans on Medicare, including:

Cap Prescription Drug Costs

Lawmakers have debated whether to allow Medicare to negotiate drug prices for more than three decades.

Now, Medicare will finally be authorized to negotiate drug prices, which is expected to benefit 5 to 7 million Americans. The drugs authorized for negotiation will include the most costly medications that do not have generic options.

Consumers won’t see the positive impacts of negotiated prices until 2026 when the new prices will be implemented. At first, prices for 10 drugs will be negotiated, with additional medications added each following year.

Limit Prescription Drug Price Increases

According to the Kaiser Family Foundation (KFF), a nonprofit organization dedicated to national health issues, half of all drugs covered by Medicare had price increases above the rate of inflation between 2019 and 2020. A third of those drugs saw price increases of 7.5% or more.

Starting in 2023, drug manufacturers will have to pay rebates to Medicare if they continue to raise the price of brand-name drugs, costing more than $100 per year faster than the rate of inflation. KFF notes that this provision could also help people with private insurance save money if it results in slower price growth for those medications.

Cap Insulin Costs

As of 2023, insulin prices for many Medicare beneficiaries with diabetes will be capped at $35 for a month’s supply. The White House says 3.3 million Americans will benefit.

The monthly cost per insulin prescription for Medicare Part D beneficiaries (who don’t receive low-income subsidies) averaged $54 in 2020, according to KFF.

Cap Out-of-Pocket Medicare Costs

Americans with Medicare Part D will have their drug costs capped at $2,000 per year starting in 2025, and there is currently no cap in place.

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Source: https://www.forbes.com/advisor/personal-finance/biden-inflation-bill-save-money/

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