Inflation Reduction Act Intent

The Inflation Reduction Act signed into law by President Biden was supposed to reduce costs for seniors on Medicare especially with drug costs.

The maximum out of pocket for drug plans will be reduced to $2,000 down from almost $8,000 starting in 2025. What has happened instead is the cost of the drug plans will increase significantly in 2025, but we haven’t seen those premiums yet. We won’t until mid-September.

CMS (Centers for Medicaid and Medicare Services) has adopted an approach that will cost Americans billions of dollars. The Biden Administration has instructed CMS plans to give Part D drug plans an additional $15 per member per month and limit how much Part D premiums will cost. This is a classic case of the left hand and right hand not knowing what each is doing. Meaning paying $15 per member per month to the insurance carriers is just another way of costing us more money. Where will that money come from? It will come from our taxes. There is no free ride, and every action has a reaction. Common sense tells us that. We were taught that when we were children.

So, I take the $15 per drug plan member per month and pay that to the insurance company forcing them to keep the plans premiums low. Well, today I am paying ZERO monthly premium for my drug plan and the plan is making money. What’s going to happen when the maximum out of pocket I can pay in a calendar year goes from $8,000 down to $2,000?

I’ll tell you the insurance companies will be paying more out of pocket. That will create two distinct problems: One, many drug plans will leave the market and there will be less choice. Two, the drug companies will figure out that by taking off some of the more expensive drugs from their formularies they will pay less money overall. I’m referring to the over the $2,000 maximum we as drug plan participants must pay. The end result is seniors with expensive medications will probably end up paying more money for those medications because they won’t be on the plan, and they will have to pay cash instead.

In my humble opinion Congress has not done the seniors anything good by reducing the maximum you can pay for medications annually. As stated above, the cost of the more expensive drugs will probably go up which is not good for our seniors. There is a better way, but it probably won’t happen anytime soon. Congress should pass a law stating that Big Pharma cannot sell in the US any medication for more than the average price they sell it for anywhere else in the world. It is not common knowledge, but Big Pharma develops these new drugs, pays little or no federal income tax (because they write off all the research and development costs against income). The rub to me is they sell these drugs everywhere else in the world for less than they do in the United States and to me that is a crime.

Solution, pass a law that they cannot write off all the R & D against income and set some kind of tax level for them to pay or the other option is no federal income tax as long as they charge drug prices in the US at the same rate they do in the rest of the world. Sort of a simple solution but because Bug Pharma provides money for Congressional re-elections, Congress has not touched this issue ever. The time has come.

To sum it up, while the Inflation Reduction Act looks good on paper, you need to get into the weeds to see and understand some of the flaws, especially for seniors within the Inflation Reduction Act.

I hope this information is helpful. If anyone has questions, don’t hesitate to contact me via phone or email, and I will respond quickly.

Also, if you need Medicare information, take a look at Medicare 2024 Information

The Barend Agency Inc.

Len Barend, Broker

Cell:702-250-2200
Email: len@insurance4unevada.com