President Joe Biden discussed several topics related to health care in his State of the Union address to Congress last week, including proposals to cap the monthly cost of insulin at $35 under all health insurance plans and to permanently extend subsidies that lower health insurance premiums for millions of Americans.
Just as in last year’s State of the Union address, the cost of insulin was front and center in this year’s speech. Last year was when Biden first announced his support for a nationwide monthly cap of $35 for insulin under all health insurance plans and recognized a 13-year-old youth advocate with type 1 diabetes, Joshua Davis, who has advocated for lower insulin costs and was sitting in the audience. Last year’s announcement drew praise from leading diabetes organizations, including the American Diabetes Association and JDRF.
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Goal of lowering insulin costs closer to reality
This year, Biden could point to that goal becoming closer to reality. Last year he signed the Inflation Reduction Act, a landmark law that capped the monthly out-of-pocket cost of insulin at $35 for Medicare beneficiaries. In this year’s speech, he noted once again that the cost of manufacturing insulin is about $10 per vial, and that Americans pay more for insulin — and for many other drugs — than residents of any other major country on the planet. While noting that the $35 cap for Medicare beneficiaries is a meaningful benefit to many seniors, Biden also remarked that 200,000 young people with type 1 diabetes don’t benefit from that cap — and called on Congress to “finish the job” and follow through with his original proposal from a year earlier, which would cover most Americans with diabetes.
Drug costs and the Inflation Reduction Act
Biden noted that the Inflation Reduction Act also capped total out-of-pocket drug costs for Medicare beneficiaries at $2,000 per year, and that if drug companies raise the cost of drugs faster than the overall rate of inflation, they will now be required to pay back the difference to Medicare. This, along with provisions of the law that allow Medicare to negotiate with drug companies, is projected to save taxpayers hundreds of billions of dollars. Lamenting that some members of Congress want to repeal these provisions of the new law, Biden issued a warning: “Make no mistake, if you try to do anything to raise the cost of prescription drugs, I will veto it.”
A record 16 million people are now enrolled in health insurance plans created by the Affordable Care Act (“Obamacare”), Biden noted — plans purchased through the federal Marketplace (healthcare.gov) or state-based insurance exchanges. The Inflation Reduction Act extended subsidies that lower the cost of premiums for these plans by an average of about $800 a year for millions of enrollees, but these subsidies are currently scheduled to expire after 2025. Biden called on Congress to make these enhanced subsidies permanent, as well as to subsidize Marketplace plans for residents of states that haven’t expanded Medicaid for lower-income adults.
Biden also evoked a hypothetical health care worker — a nurse — when he talked about how many of these health care benefits in the Inflation Reduction Act are being paid for. In 2020, he noted, 55 of the largest companies in the United States reported $40 billion in profits yet paid no federal income taxes. The Inflation Reduction Act imposes a minimum 15% tax for most billion-dollar companies. “Just 15%. That’s less than a nurse pays. Let me be clear,” said Biden.
Want to learn more about saving money on insulin? Read “Insulin Prices: Four Ways to Pay Less” and “Cheaper Insulin: Older Insulins May Be Answer to High Prices.”