Your patients have to juggle many healthcare costs, from medications and insurance fees to lab costs and out-of-pocket expenses. For many people, receiving the treatment they need can be costly. On top of it all, the payment process for these critical visits can be complex and frustrating. If your patients without medical insurance struggle to understand their bills, it can be even more complicated to figure out how they will afford the expenses.
As a healthcare professional, your practice must provide flexibility and financing options to help patients pay their bills easier and reduce late fees. In this post, we’ll look at how the Inflation Reduction Act will impact healthcare for millions of patients and how your practice can prepare to help those who may not benefit from its provisions.
The Inflation Reduction Act (IRA) of 2022 was passed by the U.S. Senate on August 7 and proposed many policy changes to reduce energy, healthcare, and prescription drug costs. The IRA aims to tackle the climate crisis, create better-paying jobs, and lower the deficit. This legislation would use Fiscal Year (FY) 2022 reconciliation instructions to complete these goals and raise revenue for American workers.
The IRA is similar to the Build Back Better bill, which targeted investing in the nation’s social safety net to provide affordable healthcare and housing and reduce the deficit. Here are the provisions in the Inflation Reduction Act:
The IRA aims to improve aspects of the healthcare industry to make medications more affordable for Americans and increase healthcare spending by approximately $100 billion.
Today, many Americans pay up to three times what people in other countries pay for medications. One of the goals of the IRA is to reduce prescription drug costs for nearly 7 million Medicare beneficiaries by allowing Medicare to negotiate these costs. The IRA also aims to cap pharmacy costs at $2,000 per year for Americans with Medicare Part D by 2025, benefitting 50 million people.
Before the IRA, people on Medicare had to spend a minimum of $7,050 out of pocket in order to qualify for catastrophic coverage, which provides patients with a small copayment or coinsurance percentage of the cost of the drug to cap expenses. With the new law, the coinsurance percentage is reduced to zero, making medication even more affordable for many patients. Finally, Medicare beneficiaries with diabetes who rely on insulin will benefit from a guarantee that their out-of-pocket expenses will not exceed $35 for a month’s supply.
The IRA extends health insurance premium subsidies for family and union members who benefit from the ACA. With these changes, there will be average savings of $800 per year for 13 million Americans. With this legislation, 3 million more citizens will have access to health insurance than without it. The IRA also plans to improve the uninsured rate, which is currently at an all-time low of 8%.
With these healthcare changes, some people with coverage under the ACA can save an average of $1,950 in premiums. Households with two adults and two children may save an average of about $2,800 on their premiums within the next year while senior households can save up to $15,000. Starting next year, senior patients on Medicare will also benefit from free vaccinations, such as pneumonia and shingles vaccines.
This historic legislation also delivers an achievement by beating back special interests to lower costs for many American families and grow the economy. The IRA aims to accomplish this goal by advancing healthcare accessibility and reducing wealthy special interests from having too much power over policymakers. Historically, many have been able to block citizens and their families from receiving fair representation and responsive governance when it comes to healthcare. For instance, Medicare has been barred from negotiating prescription drug prices for almost 20 years.
One of the most common questions many citizens may have is how the IRA will affect their taxes. Let’s look at what the IRA aims to do for taxpayers.
The IRA will ensure corporations and those who make more than $400,000 annually pay the taxes they owe by creating a 1% surcharge on corporate stock buybacks. Any household making less than that amount won’t experience any tax change. The IRA will also adjust the tax code by improving taxpayer services with transformational investments to make it easier for Americans to access their benefits and credits.
According to the Congressional Budget Office, the IRA may generate nearly $124 billion in savings over the next decade from collecting corporation tax.
The federal deficit is the additional money the government spends beyond the amount it raises from taxes. It’s estimated that the IRA will reduce the deficit by $264 billion over the next decade. Over the next two decades, the deficit is estimated to decrease by over $1 trillion. Over 120 leading economists stated that reducing the deficit will help reduce inflation and support a stronger, more stable economy.
The next areas of concern that the IRA plans to improve are climate and energy. This legislation proposes that investments will tackle the climate crisis and reduce high energy costs.
High energy costs are one of the top persistent concerns in the nation, with over 25% of households paying more than 6% of their income on energy bills alone. With the clean energy and electric vehicle tax credits outlined in the IRA, families can save an average of up to $1,000 annually.
Another goal of the IRA is to create more jobs for essential clean energy activities, such as the extraction, processing, transport, and storage of oil, coal, and natural gas. Increasing energy tax credits by 10% in communities that rely on these jobs as sources of employment can lead to more economic development and advance cost-saving clean energy projects in rural areas. By 2030, the IRA will establish:
Fossil fuel combustion accounted for 92.1% of CO2 emissions in 2020 alone. The IRA aims to reduce greenhouse gas emissions by a billion metric tons by 2030, which proposes more climate impact than any legislation ever enacted.
This legislation will prevent millions of people from becoming uninsured, make it easier for senior patients to afford life-saving insulin, and extend health insurance plans under ACA. On the other hand, some drugs are exempt from the IRA’s consideration, so this change will only apply to the price of the 10 highest-spend medications under Medicare Part D by 2026. Some experts claim that the IRA does not do enough to fight inflation or address the inequality in the nation’s healthcare system.
Other government officials argue that these provisions will have no impact on the rising prices for Americans not on Medicare. Some experts even believe that Medicare’s new negotiating power, which benefits over 60 million people, may have spillover effects on private insurance plans.
Between the Medicare pharmaceutical drug provisions and the extension of health insurance plan subsidies, you may find that some of your patients can more easily afford their medications and keep their family health insurance. For families with private insurance plans, there may still be uncontrollable rising costs. This can make it difficult for many patients to access the care and medications they need to avoid excessive out-of-pocket expenses.
With these new changes in the healthcare industry, it’s important to offer all patients financing options that make it affordable to receive the care they need while reducing financial risk to your practice. With Rectangle Health, you can access several innovative solutions to speed up your administrative processes while providing flexible financing options to patients, helping you achieve improved patient satisfaction and higher revenues.
Through our cash flow platform, Practice Management Bridge®, you can simplify and modernize your operations for faster payments and have access to our Care Now, Pay Later® financial program. This program can help ease the financial strain on your patients. Providing patient financing through in-house payment plans makes it easier for patients to pay in scheduled installments for enhanced payment plan management. To learn more about how our solution can help strengthen the relationship between your practice and your patients, contact us today.