Inflation Reduction Act Expands Health Coverage, Ignores Medicare Payment Fix
By Emma Freer

The Inflation Reduction Act, which President Joe Biden signed into law on Aug. 16, has made headlines for its deficit- and climate change-related provisions. But the omnibus legislation also will expand health care coverage and lower Medicare prescription drug costs.  

Texas Medical Association President Gary Floyd, MD, said these elements align with the association’s goals “to find ways to have more people covered by some form of insurance that truly provides them access to care,” and affordably. But, he adds, it notably does not go far enough to enact comprehensive Medicare reform. 

On the health care front, the Inflation Reduction Act: 

  • Extends subsidies for federal marketplace health plans through 2025, which the White House estimates will save 13 million Americans, on average, $800 per year on premiums. The law builds on the American Rescue Plan Act of 2021, which increased federal subsidies for certain health plan premiums.  
  • Allows Medicare to negotiate prices for insulin and nine other high-cost drugs starting in 2026, which the Congressional Budget Office estimates will reduce government spending by roughly $100 billion over the next decade.  
  • Caps out-of-pocket prescription drug costs at $2,000 per year and out-of-pocket insulin copay costs at $35 per month for Medicare patients, which the White House estimates will benefit 1.4 million and 3.3 million Americans, respectively.  

Dr. Floyd says the extended subsidies for federal marketplace health plans will help some Texans maintain their coverage when the national public health emergency (PHE) related to COVID-19 ends, which is currently scheduled for mid-October. 

Up to 14.2 million Medicaid patients across the U.S. are at risk of losing their coverage in the wake of the PHE, according to the Kaiser Family Foundation. The Families First Coronavirus Response Act increased federal Medicaid matching dollars for states that agreed to maintain Medicaid coverage for anyone enrolled in the program through the end of the PHE, including Texas.  

Between February 2020 and June 2022, Texas Medicaid enrollment increased by 1.3 million patients – or 31%, according to the Texas Health and Human Services Commission

Dr. Floyd also applauded the Inflation Reduction Act’s provisions to lower prescription drug costs, saying, “it’s hard to go up against Big Pharma.”  

Despite the law’s significant health care provisions, it isn’t a panacea. TMA and the American Medical Association have advocated tirelessly to stanch upcoming Medicare physician pay cuts, which the act doesn’t address. 

“I don’t see anything [in the law] about correcting the Medicare payment system, which needs a complete overhaul,” Dr. Floyd said. “That’s disappointing.” 

Nearly two-thirds of Texas physicians reported they might be forced to stop seeing new Medicare patients as a result of successive pay cuts, according to a 2021 TMA survey. Additionally, nearly 60% of respondents said they would consider opting out of Medicare entirely. 

In addition to fighting against looming pay cuts, TMA has joined a group of state medical and national specialty societies, led by AMA, calling for Medicare physician payment system reform.  

In late May, AMA released a set of principles endorsed by TMA – the Characteristics of a Rational Medicare Physician Payment System – to guide advocacy efforts. They call on Congress to:  

  • Provide a baseline annual physician pay raise to keep up with inflation; 
  • Eliminate, replace, or revise so-called budget neutrality requirements, which dictate any physician pay increase or decrease to be offsetting; 
  • Incentivize value-based care that suits various practice settings; and 
  • Support physician efforts to reduce health disparities.  

Dr. Floyd says comprehensive reform is necessary to ensure Medicare patients, including those who benefit from the Inflation Reduction Act, continue to have access to care. 

“If we don’t see a revamped payment structure, and the scheduled [physician pay] cuts continue at the rate that is prescribed now, access to physicians who will see new Medicare patients will diminish because physicians cannot keep their offices open,” he said.   

Last Updated On

August 30, 2022

Originally Published On

August 30, 2022

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Emma Freer


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Emma Freer is a reporter for Texas Medicine. She previously worked in local news, covering city politics, economic development, and public health. A native Clevelander, she graduated from Columbia Journalism School and the University of St. Andrews.

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