The Inflation Protection Act (IPA) was passed on August 7th, 2022. It was likely what will be considered the defining bill of the Biden Administration.
What caused such high inflation? Let’s break it down in simple terms.
- Pre-COVID, the economy was in an extended expansion going back as far as 2009 (this was the longest expansion on record).
- 2020, COVID hits, bringing the economy to a virtual standstill. Supply chains worldwide are interrupted.
- 2021–22, businesses reopen, consumers—flush with federal stimulus money and pent-up spending—fuel demands for goods and services.
- Supply chains are still not fully recovered. This causes demand to exceed supply, resulting in high inflation.
Although the IPA contained several key elements, we will highlight the impact on Medicare prescription drugs.
- Insulin costs will now be capped at $35/month/covered prescription.
- Expansion of the low-income subsidy program raises the income limits so more people will qualify.
- A yearly cap of $2000 on prescription drugs effectively closes the coverage gap.
- In 2026, Medicare will be able to directly negotiate with pharmaceutical companies to lower the price of brand name Part B and D drugs.
As with any large piece of legislation, it generally takes several years for the full impact to show itself, both good and bad. There will be winners and there will be losers. The winners will be those directly on the receiving end of the benefits. The losers will be those feeling the residual pinch of paying the bill.
Silver Crest Insurance is located at 2103 Stefko Blvd., Bethlehem 18017. Call us at 610-868-5801, email us at [email protected], or visit our website at silvercrestins.com.
