There is going to be a law to reduce inflation. What will it do for Californians

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The Inflation Reduction Act heads to President Biden’s desk.

House approved the billa smaller version of the original build back better The law, Friday afternoon, with all 220 Democrats voting for it and 207 Republicans voting against it.

Now that the nearly $700 billion package is ready to become law, what will this mean for you? Here’s a look at how the bill’s provisions could affect Californians.

Health care

California has benefited the most from many of the bill’s health care provisions because it has the largest number of potential beneficiaries.

For starters, the bill would be Additional premium subsidy for Affordable Care Act insurance policies to continue for three years That last year’s US rescue plan was inaugurated. Those subsidies — which amounted to $1.7 billion a year for California alone — dramatically reduced premiums for more than 1 million Californians, including middle-income consumers who were previously not eligible for assistance. Under the act, anyone shopping for an Obamacare plan must pay premiums no more than 8.5 percent of their income.

Covered California, the state’s health insurance marketplace, estimates that if the additional subsidies were discontinued, 220,000 Californians would no longer be able to afford insurance. Covered California is estimated to have doubled rates for many low-income Californians, with premiums increasing by an average of 71% for those earning less than 400% of the poverty line.

Now, with the expansion of aid and the state contributing its own subsidy dollars, many Californians may face even fewer barriers to access to healthcare. Anthony Wright, executive director of the advocacy group Health Access California, said Covered California could provide low- and middle-income consumers with a comprehensive, mid-tier policy with no deductibles, potentially saving them hundreds to thousands of dollars.

“So we go from the worst of times (double the premium) to the best (capped premiums, and low cost-sharing, in which the deductible is eliminated in many cases). This adds real affordability for California consumers. ,” Wright said in an email.

California also has more Medicare beneficiaries – 6.6 million in July – More than any other state, so the change in that program will have the most impact in this state. Those changes would help lower seniors’ drug costs, raise the limit in Medicare Part D premiums, and provide more support to low-income Americans.

Specifically, the act would benefit Medicare enrollees:

capping the price of insulin At $35 per month. Insulin prices rose more than four times faster than the pace of inflation from 2000 to 2018, before flattening during the pandemic. Nearly half of US states already impose some sort of border, but California (approximately) with the largest population of people living with diabetes in the country 3.2 million), does not.

setting an annual limit of $2,000 At out-of-pocket costs for prescription drugs for those enrolling in Medicare Part D beginning 2025. According to the Kaiser Family Foundation, about 115,000 Californians in Medicare Part D spent more than $2,000 out of their own pocket on drugs in 2020.

providing vaccines at no cost, Previously, some adult vaccines (such as those for shingles) required a reimbursement in Medicare. The Kaiser Family Foundation estimates that the change could save money for more than 460,000 Californians.

Limited premium increases 6% per year in Medicare Part D from 2024 to 2029. The act also repeals a Trump administration rule that was expected to raise Part D premiums by changing the way insurers negotiate discounts with drugmakers.

Enabling more low-income people For Medicare Part D, with deep discounts starting in 2024. The act makes anyone earning up to 150% of the federal poverty level eligible for discounted premiums and drug prices; The current limit is 135%. KFF estimates it could help more than 24,000 Californians.

More broadly, the act calls Medicare Negotiation on low drug prices Every year from 2026 to 2029 for the 10 to 20 most expensive drugs that have no effective competitors. Although the direct result would be savings for Medicare and its beneficiaries, if private insurers use Medicare prices as a benchmark for their negotiations with drug manufacturers, the lower prices of those drugs could spread across the market.

This also requires drug manufacturers Medicare Pay Discount If they raise the price of drugs prescribed through Part B (usually chemotherapy drugs and other drugs administered in a doctor’s office) higher than the rate of inflation starting in 2023. That change is estimated to save the government more than $100 billion, but it is unclear how it will impact Medicare beneficiaries and other US consumers.

energy and climate

The White House says the bill would reduce energy costs and greenhouse gas emissions. Nonprofit think tank resources for future projections Families will save about $170 to $220 annually Under the Inflation Reduction Act and that the bill will reduce fluctuations in electricity prices. but how?

Big picture, it’s a lot of tax credits, rebates and other financial incentives for the people who make and buy things like electric cars, rooftop solar panels and wind turbines. In the long run, reducing costs is expected to reduce both greenhouse gas emissions and your bills for more people using renewable energy technology to power their homes and commute. If the energy comes from renewable resources such as the sun and wind at facilities in the US, it is less likely, as in, a war on a different continent could suddenly cause energy or gas prices to skyrocket.

In other words: a lot of these things won’t directly reduce your bills in the immediate future. But many are likely to create a positive impact on addressing climate change, along with long-term cost savings on energy bills and transportation.

One Senate Democrats’ analysis of the bill Say the bill will help the United States reduce greenhouse gas emissions by about 40% by 2030. It’s challenging to accurately estimate how much your home could save by continuing to live on this planet, but going to the Biodome or Mars seems expensive.

Some Highlights:

Tax incentive on buying an electric or hybrid car. The bill includes tax credits of up to $7,500 for new electric and hybrid cars and up to $4,000 for older cars. To be eligible, the buyer, vehicle, and seller must meet certain requirements, such as the buyer’s income, the price of the car, and the source of the materials used to make the vehicle.

Home energy rebate programs, grants and tax credits. This bill should make your home more energy efficient and less dependent on non-renewable energy sources once it takes effect. Swapping out your old water heater, heat pump or HVAC system or adding a solar panel may qualify you to get some money back in the form of out-of-pocket rebates or tax credits.

More funding for the manufacture of clean energy components and nuclear and renewable energy generation. There will be new, expanded or expanded tax credits and additional sources of funding for the manufacture of wind turbines and solar panels and the generation of electricity from nuclear and renewable sources. (Bilateral Policy Center has More detailed analysis of these programs,

infrastructure investment. The bill allocates funds for federal projects and for investments in low-carbon building materials at the Department of Energy’s national laboratories infrastructure. There is also money for forest management and reduction Forest fire risk.

taxes

There are no California-specific tax provisions in the Inflation Reduction Act, but some of the increases will weigh heavily on the state’s tech giant.

The most important one is the new, 15% minimum tax On corporations that report profits of at least $1 billion in the past three years. This provision targets the relatively small number of major companies that paid much less than the typical US corporation, such as 55 who did not pay corporate income tax In 2020, according to the Institute of Taxation and Economic Policy.

Bloomberg told That Facebook and Apple paid less than 15% of their reported profits in taxes in 2020. It also cited a Bloomberg Intelligence analyst finding that 29 of the 60 top information technology companies in the S&P 500 paid less than 15% last year.

However, the actual impact of the tax will depend on how businesses react to the new rules. The Tax Foundation, a right-wing think tank that criticized the tax, said the real estate and logistics industries – both major players in California – could see some of the biggest tax hikes,

Another new tax to be felt by California businesses soon 1% excise tax on stock buybacksWhich one? Enhanced After President Trump signed the Tax Cuts and Jobs Act in 2017. California-based tech companies, such as Apple, Alphabet (parent of Google and YouTube), Meta (Facebook) and Oracle have spent. hundreds of billions of dollars Buying back stock in recent years in an attempt to boost share prices.

One provision Republicans have cited repeatedly is a IRS budget expanded by $80 billion, which can help bridge the gap between the taxpayers’ dues and what they actually paid. In response to the GOP’s criticisms, Treasury Secretary Janet Yellen issued a letter to IRS Commissioner Charles P. Ratig instructing that no new resources or rents be used to increase the likelihood that small businesses or Households earning less than $400,000 will be audited.

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