President Biden signed into law the Inflation Reduction Act earlier today, a bill aimed at addressing high inflationary costs, imposing higher taxes on corporations, allows government to negotiate prescription drug costs and focuses on climate change.
LOWER HEALTH CARE COSTS
The Inflation Reduction Act (IRA) will lower health care costs, including prescription drug costs, and expand health insurance coverage for Latino families.
Lower Prescription Drug Costs for Seniors: Americans pay 2-3 times more for their prescription drugs than people in other wealthy countries. High prices contribute to racial and ethnic health inequities. Among adults 65 and older, Latino Medicare beneficiaries were roughly 1.5 times as likely as White beneficiaries to have trouble affording medications, and about 2 times as likely to not fill needed prescriptions due to cost. For example, a recent study of shingles vaccination rates among older Americans showed non-Latino White Americans were over 2 times as likely to have received the shingles vaccine than Latinos, due in part to difficulty affording the shingles vaccine. The Inflation Reduction Act will help close the gap in access to medication by improving prescription drug coverage and lowering drug prices in Medicare. The law:
- Caps the amount that seniors will have to pay for prescription drugs they buy at the pharmacy at $2,000 a year, giving peace of mind to seniors who no longer have to worry about spending thousands and thousands more on prescription drugs.
- Caps the amount that seniors will have to pay for insulin at $35 for a month’s supply.
- Provides access to a number of additional free vaccines, including the shingles vaccine, for Medicare beneficiaries.
- Will further lower prescription drug costs for seniors by allowing Medicare to negotiate the price of high-cost drugs and requiring drug manufacturers to pay Medicare a rebate when they raise prices faster than inflation.
Lower Health Insurance Premiums and Expand Coverage: Since the implementation of the ACA’s coverage expansions, the uninsured rate among Latinos decreased by 11 percentage points, from 30 percent in 2013 to a low of 19 percent in 2017. Despite that progress, almost 10.9 million Hispanic people were uninsured in 2019 before President Biden took office and 640,000 Latinos fell into the “coverage gap” and were locked out of coverage because their state refused to expand Medicaid. Since President Biden took office, the uninsured rate has reached a new historic law: 8% and 5.2 million of Americans have gained health insurance coverage. The Inflation Reduction Act continues the American Rescue Plan’s more generous Affordable Care Act premium tax credits.
- The Inflation Reduction Act locks in lower monthly premiums – 80 percent of uninsured Latinos had access to a plan for $50 or less each month and 69 percent could find a plan for $0 a month in 2021.
- By continuing the improvements made through ARP, the Inflation Reduction Act will help keep free or low-cost health insurance available. Nearly 700,000 Latinos will have health insurance coverage next year, compared to without the IRA.
COMBAT CLIMATE CHANGE AND LOWER ENERGY COSTS
The Inflation Reduction Act takes the most aggressive action on climate and clean energy in American history. The legislation will bring down energy costs for families and create thousands of good jobs, all while reducing climate pollution and ensuring that we have a clean, secure future energy supply. It will:
Make Home Efficiency Upgrades More Affordable: The Inflation Reduction Act will make it more affordable for families to purchase energy efficient and electric appliances when they need to replace everyday home appliances and equipment. And, these appliances will save families money on their utility bills in the long run.
- When families need to replace air conditioners, water heaters, or furnaces, they can save up to 30% with tax credits for efficient heating and cooling equipment that will save them hundreds of dollars on utility bills.
- Households can save up to 30% with tax credits for home construction projects on windows, doors, insulation, or other weatherization measures that prevent energy from escaping homes.
- If families need to replace or upgrade stoves, ovens, or other home appliances, they can receive direct rebates when buying more energy efficient and electric appliances that can lower future utility bill by at least $350 per year.
- Families in affordable housing units will benefit from resources to support projects that boost efficiency, improve indoor air quality, make clean energy or electrification upgrades, or strengthen their climate resilience.
- Overall, families that take advantage of clean energy tax credits can save more than $1,000 per year.
Create Economic Opportunities and Jobs: The Inflation Reduction Act creates economic opportunities and jobs that will reach all Americans as it:
- Spurs solar project development in environmental justice communities by providing a 20% bonus credit for solar projects on federally-subsidized affordable housing projects and a 10% bonus credit for solar projects in low-income communities.
- Creates a new Clean Energy and Sustainability Accelerator that will seed state and local clean energy financing institutions, support the deployment of distributed zero-emission technologies like heat-pumps, community solar and EV charging, while prioritizing over 50% of its investments in disadvantaged communities.
- Expands clean energy tax credits for wind, solar, nuclear, clean hydrogen, clean fuels and carbon capture include bonus credit for businesses that pay workers a prevailing wage and hire using registered apprenticeship programs – so that the clean energy we use create good paying jobs.
Protect Public Health: The Inflation Reduction Act recognizes that climate change disproportionately impacts low-income communities and communities of color. The law:
- Creates Environmental Justice Block Grants, and a dedicated program to tackle pollution in port communities – where air pollution is especially dense and deadly.
- Funds a range of programs to reduce air pollution, including for fenceline monitoring and screening near industrial facilities, air quality sensors in disadvantaged communities, new and upgraded multipollutant monitoring sites, and monitoring and mitigation of methane and wood heater emissions.
- Protects our children with investments to monitor and reduce at public schools in disadvantaged communities.
Strengthen Resilience to Climate Change: The Inflation Reduction Act bolsters climate resilience, and strengthens the Nation’s infrastructure and economy against natural disaster and extreme weather events by:
- Upgrading affordable housing with HUD funding to reinforce homes against climate impacts, and increase water and energy efficiency.
- Expanding USDA’s Urban and Community Forestry Program with tree-planting projects that help cool neighborhoods, with a priority for projects that benefit underserved communities.
- Advancing transportation equity and resilience with a new Neighborhood Access and Equity Grant program to improve walkability, safety, and affordability, including projects to protect against extreme heat, flooding, and other impacts.
Lower Costs for Small Businesses: The Inflation Reduction Act includes a number of provisions that will save small business owners money.
- Small businesses can deduct up to $1.00 per square foot of their business for making high energy efficiency upgrades. The per square foot deduction is boosted if the efficiency upgrades are completed by workers who are a paid a prevailing wage – helping businesses save money and provide good paying jobs.
MAKE THE TAX CODE FAIRER
The Trump Administration and Congressional Republicans’ 2017 tax law only made an unfair tax system worse according to Presidents Biden. The Inflation Reduction Act of 2022 is a critical step forward in making our tax code fairer. It will raise revenue by:
- Ensuring that high-income people and large corporations pay the taxes they already owe.
- Cracking down on large, profitable corporations that currently get away with paying no federal income tax.
- Imposing a 1% surcharge on corporate stock buybacks that will encourage businesses to invest.
The legislation’s tax reforms won’t just raise revenue to finance critically needed investments to lower costs and combat climate change, they are also an important component of building an economy that rewards work rather than wealth and doesn’t let the rich and powerful get away with playing by a separate set of rules.
Millions of working families will have better access to the benefits they are entitled to under the tax code and be able to get their questions answered quickly and efficiently, thanks to the Act’s transformational investments in the Internal Revenue Service. And, no family making less than $400,000 per year will see their taxes go up by a single cent.