The climate provisions in the bill that the Senate passed this weekend are likely to be more consequential than anything else in the bill. They will lead to a sharp reduction in U.S. greenhouse gas emissions, experts say, and help address arguably the world’s most pressing crisis.
But the other main spending portion of the bill — dealing with health care — is significant in its own right, and it has received much less attention. (I virtually ignored the health provisions in a newsletter last week. And take a look, below, at yesterday’s print front page of The Times.)
Today, I want to walk through both the substance of the health care provisions and the politics of them. As my colleagues Sheryl Gay Stolberg and Rebecca Robbins have written, those provisions appear to be the most substantial changes to health policy since the passage of Obamacare in 2010.
They are all but certain to become law, too. In coming days, the House Democrats are expected to pass the same bill that the Senate did, and President Biden has made clear he will quickly sign it.
The bill sets out to reduce Americans’ medical costs in two main ways. First, it uses federal subsidies to reduce the cost of both health insurance and prescription drugs. Second, the bill gives Medicare officials the power to negotiate with pharmaceutical companies, which will likely reduce the price that the companies charge for those drugs.
For these reasons, the bill is effectively an effort to use the health care system to reduce economic inequality, much as Obamacare was. The bill’s benefits will flow overwhelmingly to poor, working-class and middle-class families. Its costs will be borne by increases in corporate taxes (which ultimately fall on shareholders, who skew wealthy) and reductions in the profits of pharmaceutical companies.
Some critics of the bill have argued that these profit reductions will lead pharmaceutical companies to spend less money developing future drugs and, in turn, to fewer promising treatments. And that’s a plausible concern. Economic incentives matter.
But most experts believe that the pharmaceutical industry will remain plenty profitable after the changes. The Congressional Budget Office — a nonpartisan body — estimates that the law will reduce the number of new drugs introduced over the next 30 years by about 1 percent. “It doesn’t seem that big a deal,” Juliette Cubanski of the Kaiser Family Foundation told me.
Here are the bill’s main provisions:
It allows Medicare officials to negotiate over drug costs, giving companies less freedom to set high prices. That measure will mostly reduce Medicare’s spending, rather than families’ out-of-pocket costs — and, by extension, will reduce the federal budget deficit. But there will probably be spillover into out-of-pocket costs, especially for people in Medicare.
The bill sets a $2,000 annual cap on the amount of money that any senior pays for drugs. After somebody hits that cap, a combination of the federal government, private insurers and drug companies will pay the remaining bills. Today, drugs for cancer, multiple sclerosis, rheumatoid arthritis and some other diseases can cost people much more than $2,000 a year. The new provision will take effect in 2025 and will save a small percentage of older Americans thousands of dollars a year.
The bill caps out-of-pocket insulin expenses at $35 a month for people in Medicare; many now pay more than $50 a month. The bill also makes adult vaccines free for both seniors and people in Medicaid, starting next year. The shingles vaccine, to take one example, now often costs more than $50.
For middle- and lower-income people who buy private health-insurance plans through the Obamacare exchanges, federal subsidies will increase for three years. This change will help about 13 million people. A typical person in this situation now pays about $80 a month in premiums, thanks to temporary funding from Biden’s Covid relief bill. The price was set nearly to double next year but now will remain roughly the same, according to Krutika Amin of Kaiser.
Will people notice?
The political effects of the bill seem less clear.
I’ve written before about the work of Suzanne Mettler, a political scientist who has pointed out that many forms of modern government remain “submerged”: Americans often do not realize when a federal policy is helping them, because the benefits come through tax credits or other shrouded forms. Modern government tends to be more technocratic and complex than, say, Social Security.
It’s easy to imagine how these health care provisions might fit the pattern. Some of the benefits will flow through private insurance plans that people may not associate with a government program, Cubanski notes. Other provisions won’t take effect for a few years. Still others will spare people from facing a large medical bill, but they may not be aware that they wouldn’t have faced such a bill if Congress had not passed a new law.
“These are meaningful changes,” Cubanski said, “but most people may not necessarily notice that things are changing for the better.”
All of which suggests that the law’s proponents will still have work to do after the House passes it and Biden signs it. “It’s always important for supporters of a policy to explain how it will benefit people,” said Sarah Lueck, a health care expert at the Center on Budget and Policy Priorities. “And that’s really hard work.”
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