Two years in, the Inflation Reduction Act is lowering health care costs in Pennsylvania

The Inflation Reduction Act ensured that 76,000 Pennsylvanians were able to keep their health insurance, reduced the cost of insulin for over 80,000 Pennsylvania seniors, and incentivized manufacturers to invest in the state and create more clean energy jobs.

Two years ago today, the Inflation Reduction Act (IRA) was signed into law.

The legislation represented the largest-ever investment in fighting climate change, lowered health care and prescription drug costs, raised taxes on corporations, and boosted funding for the Internal Revenue Service to go after wealthy tax cheats.

The bill was passed with only Democratic votes—including that of Pennsylvania Sen. Bob Casey—with every Republican in Congress voting against it, despite its potentially transformative impact on the economy and the nation’s clean energy infrastructure.

Here are some highlights of how the Inflation Reduction Act has impacted Pennsylvania:

Lower health care and prescription drug costs

The Inflation Reduction Act extended generous subsidies that helped make Affordable Care Act (ACA) health insurance plans more affordable for working- and middle-class families.

Those subsidies were introduced as part of President Joe Biden’s American Rescue Plan of 2021, and were set to expire at the end of 2022, but the IRA extended them through the end of 2025.

Roughly 76,000 Pennsylvanians were set to lose their individual coverage and become uninsured had those subsidies expired at the end of 2022, but thanks to the Inflation Reduction Act, those people got to keep their insurance.

The IRA also reformed Medicare to lower drug costs for many of the roughly 2.3 million Pennsylvania seniors with Medicare Part D coverage, which covers prescription drugs.

For example, beginning last year, all vaccines covered under Medicare Part D are free, and the bill implemented a $35 monthly cap on insulin for Medicare recipients.

As a result, over 80,000 Pennsylvania seniors on Medicare who use insulin are now charged no more than $35 per month for an insulin prescription. 

The IRA will also implement a $2,000 cap on Medicare recipients’ annual out-of-pocket prescription drug costs, beginning in 2025. In Pennsylvania, an estimated 829,770 seniors are expected to save $467 a year each due to this provision, according to an analysis by the US Department of Health and Human Services.

Additionally, the law authorized Medicare to negotiate prices for expensive drugs with pharmaceutical companies for the first time. On Thursday, the Biden-Harris administration announced the new, lower prices of 10 expensive and widely-used drugs that were selected last year for the first round of negotiations.

The negotiations — which used the power of Medicare to lower drug costs for seniors — are expected to save taxpayers about $6 billion in 2026, when they go into effect. The new prices will be anywhere from 38% to 79% lower than the drugs’ list prices last year, saving seniors on Medicare an estimated $1.5 billion in out-of-pocket costs in 2026 alone. 

Fighting climate change and saving families money on energy

Arguably the most critical element of the IRA is its provisions to reduce emissions that cause climate change and drive extreme weather events. The law aims to do this by establishing a mix of tax credits for companies and rebates for consumers in order to make the manufacturing and consumption of clean energy technologies and products cheaper. 

In other words: by making clean energy—like solar, wind, and hydropower—cheaper to produce and use, the IRA seeks to hasten the transition away from fossil fuels that are one of the biggest sources of emissions.

For example, under the law, manufacturers get subsidies for building electric vehicles (EVs) and renewable energy products, and utilities get credits for choosing solar and wind energy over fossil fuel plants.

As of 2024, the Inflation Reduction Act has spurred nearly $1.1 billion in new clean energy investments in Pennsylvania and created 2,881 new clean energy jobs statewide, according to Climate Power.

In Pennsylvania, several manufacturers have already taken advantage of the IRA’s incentives.

Prysmian Group North America, a group of telecom, energy, and cable companies, announced plans last year to expand its existing Williamsport manufacturing facility. The expansion will increase Prysmian’s domestic manufacturing capacity of advanced transmission conductor technology, which is a critical step in ensuring the reliability and resilience of the US power grid, as well as helping the environment. This will create at least 27 new jobs in Lycoming County, and retain a total of 407 jobs statewide.

Doral Renewables, a renewable energy company that develops utility scale projects, announced that it was investing $250 million into new solar engineering designs through its Goonies Solar project in Pennsylvania last year. The investment will generate 194 Megawatts of clean, renewable electric power, enough to serve 23,000 Pennsylvania households annually.

The IRA also provided $80 billion in financial rebates for millions of households to adopt those clean energy products, such as electric vehicles, solar panels, and more efficient heat pumps.

More than three million American households took advantage of the IRA’s subsidies for homeowners last year, which led to a combined savings of $8 billion, according to data from the Treasury Department. This includes 158,550 Pennsylvania households that saved nearly $268 million, or $1,690 per household on average.