From capping insulin prices to electric car tax credits, how the IRA could impact Maconites

The Inflation Reduction Act (IRA) includes a variety of legislation affecting healthcare, clean energy, climate action and tax reform across the country and in communities like Middle Georgia.

Signed into law by President Joe Biden earlier this month, the bill has been championed as a landmark victory by Democrats and drawn criticism from Republicans for its spending and effectiveness at decreasing inflation in the short term.

Sen. Raphael Warnock (D-Ga.) spoke with the Telegraph the day the IRA was signed into law.

“I am thrilled that the Inflation Reduction Act was signed into law today,” he said. “This bill will go a long way with lowering the cost of healthcare in our state, bringing new energy jobs while at the same time lowering both the deficit and inflation.”

Republicans were critical of the legislation, which they said does little to reduce inflation and sharply increases government spending.

“According to the bipartisan Congressional Budget Office (CBO), this bill would have a negligible effect on inflation this year and would only reduce inflation by .01% at best in 2023,” Rep. Austin Scott, who represents a large portion of Middle Georgia in Congress, said after the bill passed. “This legislation only digs American families and businesses into a deeper financial hole, and I opposed this effort to raise taxes and urge the Democrats to stop this exorbitant overspending.”

From capped healthcare costs and clean energy subsidies to sustainable aviation incentives and aid for struggling farmers, the IRA brings changes to various sectors. But how will these changes affect Middle Georgia specifically?

Local experts Nicholas Creel and Dr. Harry Strothers, III discussed how this new legislation will uniquely impact Middle Georgia residents.

Cap on insulin copays

Strothers serves as the chief of family medicine for the Family Medicine Residency program at Atrium Health Navicent and chair of the Department of Family Medicine for Mercer University’s School of Medicine. He said the IRA’s healthcare components mainly impact Medicare recipients, with various pieces of legislation being gradually phased in from 2023 through 2029.

One of the first changes to take effect starts in 2023, when insulin copays will be capped at $35 a month for patients with Medicare Part D.

“Estimates range up and down, but between 30 and 40% of Medicare patients usually have diabetes,” Strothers said. “Not all of them will be on insulin, but I would say probably about 15% of Medicare patients, at least the ones that we see, are on insulin. So that will be a huge deal for them to only have to pay $35 a month. I have patients who basically don’t take as much insulin as they’re supposed to because they can’t afford it. We also have patients who, to help them get by, we have them on less expensive types of insulin combinations that would not be the best choice for them, but that’s what they can afford.”

Strothers said his patients who take insulin have already commented that “they can’t wait” for it to take effect.

The insulin price cap is one of two provisions in the IRA that were previously introduced as bills by Warnock. The other provision also benefits seniors with Medicare Part D, capping out-of-pocket prescription drug costs at $2,000 a year starting in 2025.

“I’m especially proud that two bills that I authored are in this package,” Warnock said.

In July, the senator chaired a Senate Aging Committee field hearing about his efforts to cap seniors’ drug costs.

“I was in Fayetteville, Georgia not long ago talking to a woman who is a widow,” he said. “She said that in the remaining months and years of her husband’s life, who’s now deceased, they were spending as much as $12,000 a year maxing out credit cards on prescription drugs. So we will see some relief on that with the capping of insulin next year, the capping of prescription drugs for seniors in 2025 and the work of lowering costs into the future. We’ll see benefits both in the long term and in the short term.”

Strothers said the $2,000 cap on prescription drugs will bring “great relief,” especially for people with cancer or taking new medications like those for multiple sclerosis or rheumatoid arthritis.

Creel, who is a political scientist and assistant professor at business law at Georgia College & State University, said this cap will result in more than “one million seniors saving about $1,000 per year.”

According to Creel, the IRA’s “biggest change” to Medicare is that the program will now be able to negotiate prices for certain prescription drugs starting in 2026.

“On average, in the United States, our seniors pay two-to-three times the amount for the same medication that seniors in other countries pay for,” he said. “The big reason for that is they utilize Medicare here … And they have not up until now been allowed to negotiate en masse. So we just have to take the market price for what it is instead of using the negotiating power of the federal government to drive those down. And that’s about the change, so a lot of those more expensive medications are definitely going to start dropping in price in the coming year.

“It’ll also control the rate at which they can hike drug prices … Any time a company raises a drug price higher than the level of inflation, they’re gonna get hit back with a rebate program that basically takes away that extra profit from the price gouging that they put out.”

Creel also explained that the IRA will benefit Americans by extending Affordable Care Act subsidies that were set to expire this year through 2025.

“There are about 13 million Americans who are on that program,” he said. “And so if we didn’t re-up this, that would have been about an $800 a year expense added to a lot of different Americans’ costs for maintaining health insurance. That’s one big area that can help a lot of Americans, including those in Central Georgia. Particularly Central Georgia, we know there are a lot of rural areas, a lot of high poverty rates and those are some of the areas most likely to have people who do qualify for those subsidies. So it will provide some fairly significant relief to those areas.”

As a family physician and geriatrician, Strothers said the healthcare legislation in the IRA will also benefit providers in their work.

“For healthcare providers, especially primary care, physicians and some subspecialists, this will make it easier to effectively help our patients manage their disease,” he said. “We don’t have any control over how much stuff costs. And generally, you know, we’re taught to treat people in the way that those patients are going to get the best outcomes. And we’ve had to make compromises with our suggestions to them, because it doesn’t help to prescribe something if the patient can’t afford it.

“We will have more and more Medicare patients as us Baby Boomers cross that 65 age. So this was very good for that growing population of Georgians.”

$130 billion in tax credits

The IRA includes a variety of legislation related to clean energy and sustainability. These include investments and incentives for solar panel manufacturers, sustainable aviation fuel production, electric vehicle manufacturers and more.

“There’s a lot of this bill that invests in the clean energy future and investments in the domestic production of solar panels,” Warnock said. “When you consider that we have the Qcells plant right there in Dalton, Georgia, this could very well mean new jobs in our state. That’s in addition to investments in sustainable aviation fuel, which is something I’ve been pushing for, as well as electric buses.”

Creel said the IRA will help electric vehicle manufacturers like Rivian, which is expected to open its Social Circle plant in 2024.

“I think that Rivian will have a big reason now to think about expanding that plant as much as they can and getting it set up,” he said. “Because we do see the $7,500 tax credit for new electric cars has been extended for the next decade. And not only that, they have to be manufactured in the states, their batteries have to be created here in the United States. So a plant like Rivian now is going to be very, very happy to hear that because it’s going to make them more competitive than anybody who is looking to make an electric car overseas and then bringing it over here. That’s something that can help on the jobs front, especially when it comes to manufacturing.”

Creel discussed how the bill’s energy subsidies can also benefit everyday Americans and not just manufacturers.

“There’s a little over $130 billion in clean energy tax credits,” he said. “Some will be available to your average American. So if you’re in Central Georgia and you’re wanting to weatherize your house, if you’re wanting to get a heat pump or some rooftop solar panels, your average American is going to be able to qualify for something close to about $10,000 in tax breaks and rebates to do that. It’s going to be cheaper to go ahead and start utilizing that stuff, which will lower your energy bill. It’ll make that upfront cost go down so it’s easier to stomach and then you’ll have those long-term savings sort of locked in for going green.

“It’s another way where over the long term, the more people who do that in Georgia and in the United States in general, that’ll lower the amount of demand for fossil fuels, which then can over time drive down those prices. It could drive down inflation, but it’s going to be one of the things that, especially when it relates to energy, it’s going to take several years to really see the full effect.”

Combating inflation?

“When you see that it’s called the Inflation Reduction Act, I think one of the biggest things that I’ve taken away from it is that it’s not really well named,” Creel said.

He said that while the IRA will help people in Middle Georgia in a number of ways, it won’t create a notable decrease in inflation in the short term.

“This is really a long-term inflation game,” Creel said. “In the near term, it’s just not likely to do much, because in the near term, we see what’s really driving inflation now is largely gas and food prices. And those are things that just take a long time to stabilize. This is something that will help stabilize and drive the prices down. But again, it’s going to take a long while for it to really work its way in.”

$5.3 billion for farmers

The IRA brings large investments in supporting sustainable farming practices and aiding economically distressed farmers, including those in Middle Georgia.

According to a release from Warnock’s office, the bill commits $3.1 billion toward supporting farmers who are at the highest risk of losing their farms and $2.2 billion for “farmers who have suffered historical discrimination in federal farm loan programs.”

Creel discussed how the IRA’s billions in investments toward supporting sustainable agricultural practices can help not only local farmers but all Americans.

“We saw about $21 billion in farming aid to both cut emissions and make their crops more resilient to climate change,” he said. “What we’ll see there is your rural farmers in the United States are going to be able to start qualifying for more programs, to find little ways to start going green and to help mitigate against disasters that are becoming increasingly common with climate change.

“With that, the average American is likely to start to see a more stable food price. Because we’re going to start to be able to weather those types of events a bit more easily, a little more robust food chain, since we’re going to be protecting against the climate impacts that we know are coming.”

This story was originally published September 1, 2022 at 5:00 AM.