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  • Washington Highlights

    Reconciliation Legislation Heads to President’s Desk


    Sinead Hunt, Legislative Analyst
    Allyson Perleoni, Director, Government Relations
    For Media Inquiries

    On Aug. 12, the U.S. House of Representatives voted 220-207, along party lines, to pass the Inflation Reduction Act of 2022 (H.R. 5376), sending the health care, tax, and climate budget reconciliation bill to President Joe Biden for his signature. This follows Senate passage of the legislation in a 51-50 vote on Aug. 7 after a tie-breaking vote cast by Vice President Kamala Harris. The legislation represents the culmination of months of negotiations between Senate Majority Leader Chuck Schumer (D-N.Y.), Sen. Joe Manchin (D-W.Va.), and Sen. Kyrsten Sinema (D-Ariz.) following the House passage of the much more expansive Build Back Better Act (H.R. 5376) in late 2021 [refer to Washington Highlights, July 29].

    Upon Senate passage of the legislation, AAMC President and CEO David J. Skorton, MD, issued a press statement applauding the bill and urging the House to pass it. “As the COVID-19 pandemic has highlighted many disparities in access to coverage and care, we commend senators for agreeing on a bill that will allow patients and families to maintain access to affordable coverage, empowering them to seek care before treatable conditions become more complicated and costly,” he stated.

    The Inflation Reduction Act includes an AAMC-supported three-year extension of the enhanced Affordable Care Act premium tax credits originally provided by the American Rescue Plan Act (P.L. 117-2). The package also aims to reduce the cost of prescription drugs by allowing Medicare to negotiate prices for certain drugs covered by Parts B and D, requiring rebates from manufacturers that increase the price of Medicare beneficiaries’ drugs more than inflation, and capping Medicare beneficiaries’ out-of-pocket costs for drugs to $2,000 per year.

    Before the Senate vote, the reconciliation package underwent several key changes based on the required review by Senate Parliamentarian Elizabeth MacDonough. Notably, MacDonough ruled that several of the Democrats’ drug pricing provisions violated the Byrd rule and therefore could not be considered as part of the budget reconciliation process. Originally, the legislation proposed to require rebates from pharmaceutical manufacturers that increase the price of their drugs faster than the rate of inflation in both Medicare and the commercial sector. Per MacDonough’s ruling, the final bill limited applicability of the provision to the Medicare program.

    In addition, the original package aimed to cap out-of-pocket costs for insulin to $35 per month for both Medicare beneficiaries and individuals with private health insurance. MacDonough determined that limitations on cost-sharing for those with private insurance also do not comply with the budget reconciliation requirements. Despite this ruling, Senate Democrats subsequently pursued an amendment to include this provision in the final package, which failed in a 57-43 vote.

    Following MacDonough’s review, the Senate engaged in 20 hours of debate, culminating in a subsequent 15-hour “vote-a-rama,” during which they considered nearly 40 amendments offered by both Republican and Democratic Senators. Sen. Raphael Warnock (D-Ga.) proposed an amendment that would close the Medicaid coverage gap by extending coverage to low-income individuals residing in Medicaid nonexpansion states, which was ruled out of order. Sen. Bernie Sanders (I-Vt.) proffered an amendment that would require that Medicare pay no more than the Department of Veterans Affairs for prescription drugs. The amendment failed by a vote of 1-99.

    In a statement, House Speaker Nancy Pelosi (D-Calif.) praised the Senate for passing the legislation, and President Biden has indicated support for the legislation and said he will sign the bill.