On Tuesday, August 16, 2022, President Biden signed the Inflation Reduction Act into law, marking a significant win for his administration that meets several of his campaign promises.
As previously reported, this spending bill was negotiated primarily between Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV) and focuses on climate change, healthcare, and deficit reduction. The bill is significantly narrower than the House-passed Build Back Better legislation but includes important improvements in these key areas.
Several of the provisions in the bill will result in lower costs and improved quality of life for families with low income, according to this analysis by the Coalition on Human Needs, which is summarized below.
In terms of health care reform, the bill will accomplish several of the necessary reforms for which advocates have fought. The bill:
- Extends the Affordable Care Act premium tax credits enacted in the American Rescue Plan for an additional three years, preventing coverage loss and reducing costs for millions.
- Allows negotiation on prices for a limited number of high-cost prescription drugs within the Medicare program and sets a $2,000 out-of-pocket cap on prescription drug costs for patients with Medicare prescription drug coverage.
- Caps monthly Medicare insurance copays for insulin to $35 per month.
Senator Schumer declared the bill the “boldest climate bill ever,” and the provisions included are estimated to reduce carbon emissions by 40 percent by 2030. It includes:
- $60 billion in grants, tax credits, and other subsidies to help lower-income families transition to a clean energy economy and adapt to rising temperatures by increasing the energy efficiency of their homes, cars, and communities.
- $8.8 billion to states and tribes to help families transition to energy efficient electric homes, including funds to help lower-income families purchase and install energy efficient appliances.
- $1 billion in grants and loans for HUD-administered affordable housing retrofits to increase energy and water efficiency.
- $27 billion Clean Energy Fund to accelerate the development of low-carbon energies
- an excise tax on coal to fund the Black Lung Disability Fund for coal miners with serious disease from their work in the mines.
The bill raises revenue through several tax reforms, including requiring corporations with more than $1 billion in average annual profits to pay at least 15 percent in taxes on their profits and new 1 percent tax on the money that companies spend to purchase back their own stock. It also includes:
- $80 billion over 10 years for the IRS to rebuild staff and systems.
- $3 billion for taxpayer services; $15 million in the package is slated for the IRS to prepare and deliver a report to Congress on the cost of developing and running a free direct e-file tax return system
Speaker Nancy Pelosi (D-CA) called the House back from recess and convened on Friday, August 12th to vote on the bill without changes. Every Democratic Representative voted yes, showing unity among members of President Biden’s party.
Provisions for children and families are notably missing from the final bill; paid leave, child care, the Expanded Child Tax Credit and other important components of the Build Back Better bill were all cut out of the final package. Advocates have turned their attention to a potential end-of-year bill as a vehicle for additional reforms, calling on Congress to provide relief for families before the end of the legislative session, but there’s no guarantee that these proposals will be included.