Texans on Medicare will get relief from high drug prices when this law goes into effect

·3 min read
John Locher/AP

Thousands of older Texans pay an average of $564 a year for insulin, a drug that is life-saving for people with diabetes.

But when a new proposal is signed into law, those Texans will pay no more than $35 a month for insulin, or $420 a year.

This cap on insulin costs is one of several ways the Inflation Reduction Act will help Medicare beneficiaries pay for prescription drugs. The act has already been approved by the U.S. Senate and was passed by the House on Friday. President Joseph Biden has said he will sign the act into law.

The legislation is best known for the $370 billion it will invest into climate and energy programs to try and reduce the impacts of climate change.

But it will also provide robust protections for people enrolled in Medicare and help protect them from exorbitant drug costs. Medicare is the federal health insurance program for people who are 65 and older, as well as for people of any age with disabilities. In Texas, there are almost 4.3 million people who get their health insurance through Medicare.

The legislation passed along party lines, with Democrats supporting the measure and almost all elected Republicans opposing it. Republicans in Congress opposed the legislation because includes tax increases for some corporations.

Here’s what the legislation’s health care provisions will mean for you.

Insulin

Insulin is a life-saving drug that is taken by many people with diabetes. Some people with diabetes can live only a short time without insulin.

But the essential drug is prohibitively expensive for many diabetic Texans, even if they have health insurance. Statewide, there are more than 125,000 Medicare beneficiaries who need insulin, but who don’t receive any subsidies to help them pay for the drug costs. These Texans, many of whom are middle class, pay an average of $564 a year for their insulin, according to the Kaiser Family Foundation.

For those 125,000 people the Inflation Reduction will lower that cost to $35 per month.

Lawmakers had initially wanted to create a $35 insulin cap for people who get their health insurance through their jobs, but that provision was removed from the legislation. Texans who don’t have insurance, or who get their insurance through their jobs, through the Affordable Care Act marketplace, or through other health insurance programs would not be protected from high insulin costs.

The $35 cap would go into effect next year.

Out-of-pocket spending cap

The law would also put a $2,000 on out-of-pocket spending cap for Medicare beneficiaries, meaning that Texans who get their health insurance through Medicare would pay no more than $2,000 a year for prescription drugs.

“This lowers costs for people who would otherwise pay thousands of dollars for their medications, typically patients who take high price drugs for serious conditions, like cancer,” said Tricia Neuman, a Senior Vice President at the Kaiser Family Foundation and an expert on Medicare.

If the Inflation Reduction Act is signed into law, the $2,000 cap would go into effect in 2025.

Other major changes include requiring the federal government to negotiate with drugmakers over the cost of some prescription medications, and a rebate if the price for some drugs for Medicare beneficiaries rises faster than the rate of inflation.

What else?

Many of the act’s changes will benefit Texans who get health insurance through Medicare. But another important provision would help Texans who purchase their health insurance through the Affordable Care Act Marketplace, often known as Obamacare. Last year, people got more money from the government than ever before to help pay for health insurance. But those subsidies were scheduled to expire this year, meaning thousands of Texans would have faced higher costs when then went to select their new insurance plans in November.

The Inflation Reduction Act will extend the subsidies through 2025.

Many of the other parts of the Inflation Reduction Act will tackle climate change. The legislation will invest billions over the next decade in tax credits to encourage people to buy electric vehicles and power their utilities with renewable energy sources.