HomeEconomyWhat does the Inflation Reduction Act Mean for Michigan?

What does the Inflation Reduction Act Mean for Michigan?

Armand Jackson

Even before the drastic increase in inflation this year, Michiganders have struggled with paying for health insurance, prescription drugs, and insulin. Michigan is also not immune to the dangers associated with the climate crisis, so many are looking for new investments and innovations in the state’s energy sector. So in order to address these unprecedented issues, the U.S. Senate on August 7th passed H.R.5376, the Inflation Reduction Act of 2022. The roughly $740 billion Democratic bill, which carries many aspects of The Build Back Better Act, passed the Senate having no Republican support with a 51-50 vote along party lines. It later passed the U.S. House of Representatives on August 12th, also having no Republican support with a 220-207 vote.

It has now been sent to President Biden’s desk to be signed into law. So what exactly does the Inflation Reduction Act entail? The bill has a myriad of goalsbut there are three main objectives that it would accomplish; lower prescription drug prices; help people pay for health insurance; and invest into renewable energy as well as reform the energy sector to address climate change, all while reducing the national deficitby curbing price gouging, closing tax loopholes, and making billion-dollar corporations pay a new 15 percent corporate minimum tax rate. To address prescription drug prices, seniors and patients in general on Medicare will see insulin prices capped at $35 a dose; Medicare can negotiate prescription drug prices; cap Medicare beneficiaries’ out-of-pocket costs at $2,000 per year; and allow them to spread their costs over monthly payments. 

The bill also provides more assistance for low-income seniors on Medicare, and provides free Medicare coverage of all vaccines. The bill also penalizes drug companies for price hikes in Medicare that exceed the rate of inflation by requiring drug companies to pay the Medicare program for excess increases. For health insurance costs, the bill would extend the subsidies provided during the pandemic, which were set to expire this year, for three more years. This will also help those Americans who buy their own health insurance policies by lowering insurance premiums. Unfortunately, those who have private insurance will not see insulin prices capped at $35 a dose due to not having enough Republican support in the Senate.

The bill also represents the single biggest climate investment in U.S. history as it will invest nearly $375 billion over the next ten years in tackling climate change by increasing clean renewable energy production. It will bring down consumer energy costs, support rural communities, provide clean energy manufacturing tax credits, as well as provide a ten year consumer tax credit for renewable energy investments in wind and solar. This includes tax breaks for buying electric vehicles. Overall, this portion of the bill according to Democrats would put the U.S. on a path to roughly 40 percent emissions reduction by 2030. 

The national GOP platform as well as The Michigan Republican Party stated that their reasons for being against the legislation is that it’ll probably ruin the economy and make things worse, although they have not provided evidence to substantiate such a claim. It appears based off of a recent polling from Data for Progress and Climate Power that the majority of voters across the political spectrum support the Inflation Reduction Act. The Center on Budget and Policy PrioritiesRoosevelt Institute, and Michigan League of Conservation Voters all also seem to support the legislative bill and believe in its ability to address the issues of high prescription drug prices, health insurance costs, and climate change. 

Michigan Senators Debbie Stabenow and Gary Peters, both voted in favor of the bill, have released statements on their respective sites responding to the Inflation Reduction Act and go into detail on how it benefits Michiganders in the years to come. Senator Stabenow stated: “This bill is fully paid for and reduces the deficit by making corporations pay taxes like everyone else.” Senator Peters said: “Thanks to the Inflation Reduction Act we passed in the Senate, we will lower costs for families including for prescription drugs.” They also have video versions of their remarks on the bill.

Reprinted from the Tri-City Record