Advocates unpack the details in new climate, health and tax law

Prescription cost savings among the provisions highlighted in Inflation Reduction Act

By: - August 31, 2022 6:45 am
Person with lab coat putting pills from an orange prescription bottle into her hand.

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In the two weeks since President Joe Biden signed a massive bill that incorporates health care, climate and tax measures into law, the legislation’s supporters have been working to convey its details to the public.

The legislation, which the authors dubbed the Inflation Reduction Act, passed Congress with votes from Democratic lawmakers only. Biden signed the bill on Aug. 16. 

On Tuesday, provisions in the new law to rein in prescription drugs got the spotlight at a news conference held outside a drugstore in the Madison suburb of Fitchburg.

Fitchburg Mayor Aaron Richardson (Erik Gunn | Wisconsin Examiner)

“Health care lies at the heart of the Inflation Reduction Act,” said Meghan Roh, program director for Opportunity Wisconsin, one of the advocacy groups that organized the news conference. “And the provisions to reduce costs and expand care are overwhelmingly popular with Wisconsinites across the political spectrum.”

Opportunity Wisconsin focuses on economic issues from the perspective of working people. The organization also took the occasion to skewer Sen. Ron Johnson (R-Wis.), who is running for re-election, for his vote against the legislation.

“Health care isn’t optional, it’s something that is required,” said Fitchburg Mayor Aaron Richardson, who is running for Wisconsin state treasurer as a Democrat. Richardson said the bill’s health care provisions have an impact on the community and its services. 

When people don’t take prescribed medications because of the cost, they can wind up in the hospital in an emergency, he said. That affects the community if, for instance, they use its emergency medical service to get there “because of people who are not doing the things they need to do to take care of themselves.”

Thad Schumacher, owner of Fitchburg Family Pharmacy (Erik Gunn | Wisconsin Examiner)

Thad Schumacher is the owner and pharmacist at Fitchburg Family Pharmacy, where the news conference was held. He and his colleagues across the state “see their patients taking less medication than they’re supposed to take and making their own decisions based on financial needs,” Schumacher said. “And a lot of that is due to the high prices.”

Pharmacy retailers don’t make a windfall from the high-priced drugs they sell, he said, calling the current system of pricing medications “opaque.” Depending on reimbursement rates, retailers might lose money on some transactions. “I support the effort to lower prescription drug prices,” he said. “And I hope that this is just the start” of moving toward a system that is more transparent for patients and retailers alike.

Stripped down milestone

Although it was stripped down from an even more ambitious legislative package that Democrats and the White House had originally sought last year, the new law is still an important milestone in the view of Robert Kraig, executive director of Wisconsin Citizen Action.

“It would have been great to get the whole Build Back Better agenda,” Kraig said Tuesday in an interview, using the moniker that Democrats and the Biden administration had applied to the bill in its original form when it was rolled out in 2021.

But with the U.S. Senate evenly split between Republicans and Democrats and two of the Democrats — Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona — unwilling to sign on to the original bill, said Kraig, that wasn’t going to happen. “This is an historic step — and it’s the most that we can possibly get right now,” he said. “And it’s far better than not having anything, given the stakes.”

The legislation:

  • For the first time allows Medicare to negotiate the cost of prescription drugs, starting with 10 drugs in 2026 and increasing in stages to 80 drugs by 2030.
  • Limits the patient’s cost for insulin to $35 per month, helping more than $58,000 Wisconsin Medicare recipients.
  • Provides free vaccines for Medicare patients. 
  • Caps annual prescription drug costs for Medicare patients at $2,000 by 2025, affecting more than 29,000 Wisconsin Medicare users whose annual out-of-pocket costs exceed $2,000, according to the Kaiser Family Foundation.
  • Extends for another three years higher subsidies for people who buy health insurance through the federal exchange created under the Affordable Care Act (ACA). More than 187,000 Wisconsin residents will save money as a result, according to Protect Our Care, an ACA advocacy group. 
  • Provides rebates for consumers installing new electric appliances and for households repairing and improving homes to increase energy efficiency, according to a White House fact sheet on the law’s impact on each state.
  • Provides tax credits to cover 30% of the cost of installing residential solar panels and battery storage systems as well as for making home improvements to reduce energy loss or other heating and cooling upgrades; tax credits to cover 30% of the cost of community solar projects, with additional credits for affordable housing properties and in low-income communities; grants to help state and local governments adopt new building and energy codes.

Kraig said that continuing the health insurance subsidies under the ACA was another significant provision. “That’s hugely important for the affordability of health care for working people who don’t get insured at work,” he said.

Revenues and climate

The legislation is projected to raise an estimated $222 billion in a new 15% corporate minimum tax and another $124 billion through beefed-up enforcement of the Internal Revenue Service as it goes after tax scofflaws. A fee on corporate stock buybacks along with the prescription drug pricing measures are forecast to yield another $300 billion in combined federal savings and revenue.

Robert Kraig, Wisconsin Citizen Action

“It’s a breakthrough finally to say every corporation is going to pay a 15% minimum tax,” said Kraig. “And there is a way around it — they can invest more and pay their workers in the U.S. more.”

At an Aug. 23  news conference organized by the advocacy group Climate Power, Racine Mayor Cory Mason credited the legislation for “its commitment to environmental justice and really creating grant funding for the communities that have been most devastated by the impacts of climate change.”

The law does so by offering grants “in ways to make sure that the ability to enjoy the benefits of this bill isn’t limited to the folks who can afford to put solar panels on their roof,” Mason added. “It’s really meant to extend to everybody.”

Kraig said that the tax credit financing mechanisms in the climate provisions have been structured to ensure that converting to renewable energy sources and implementing energy conservation measures is affordable for people who have the lowest incomes and who live in the oldest housing stock. They are more likely to be Black or Hispanic, and they bear the highest burden when it comes to energy costs, he said.

Now his organization is turning its attention to ensuring that the work of making those upgrades can be done by residents of those communities at jobs where they can make a living wage. “How we do this is going to matter a lot,” Kraig said. 

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Erik Gunn
Erik Gunn

Deputy Editor Erik Gunn reports and writes on work and the economy, health policy and related subjects, for the Wisconsin Examiner. He spent 24 years as a freelance writer for Milwaukee Magazine, Isthmus, The Progressive, BNA Inc., and other publications, winning awards for investigative reporting, feature writing, beat coverage, business writing, and commentary. An East Coast native, he previously covered labor for The Milwaukee Journal after reporting for newspapers in upstate New York and northern Illinois. He's a graduate of Beloit College (English Comp.) and the Columbia School of Journalism. Off hours he is the Examiner's resident Springsteen and Jackson Browne fanboy and model railroad nerd.

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