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House Passes Budget Bill That Could Improve Medicare

Build Back Better legislation would let federal officials negotiate prescription drug prices

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The U.S. House of Representatives voted Nov. 19 to approve landmark legislation that could boost the quality of life for millions of older Americans and their families, ranging from significant improvements to Medicare to expanded home- and community-care services to more affordable housing options.

The House voted 220-213 to pass President Biden’s Build Back Better (BBB) bill. AARP fought hard to make sure the legislation included key reforms to make Medicare more affordable and effective for older Americans as well as include financial support for America's 48 million family caregivers.

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“Today’s vote is a critical step to help seniors afford the prescription drugs they need,” says Nancy LeaMond, AARP executive vice president and chief advocacy & engagement officer. “The bill that the House passed today includes meaningful reforms to bring down medication costs: finally allowing Medicare to negotiate drug prices, preventing prices from rising faster than inflation and adding a hard out-of-pocket cap to Part D.”

This measure is one of two major pieces of legislation being pushed by the Biden administration. The other, the Infrastructure Investment and Jobs legislation, was passed in Congress and signed by President Biden on Nov. 15.

If it becomes law, the legislation the House passed would have a broad impact on American society. Here are some of the ways the Build Back Better Act could affect millions of older adults.

Medicare. In what could be a big win for older Americans, Medicare would be able to negotiate with manufacturers to make some prescription drugs more affordable. The agency would be able to negotiate the prices of up to 10 drugs per year starting in 2023, with that number eventually becoming up to 20 drugs per year. Drugs would be eligible for negotiation once they’ve been sold for either nine or 12 years, depending on the drug’s makeup.

The legislation also would cap out-of-pocket costs for Medicare Part D prescription drugs at $2,000 per year and prices for some insulin at $35 per month. Also, under the BBB legislation, drugmakers would face tax penalties if they increased prices more than the rate of general inflation.

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Beginning in 2023, Medicare recipients also would receive some coverage for hearing aids and hearing services.

Affordable Care Act. For people who buy their health insurance through the ACA marketplaces, the BBB legislation would extend the federal premium subsidy and other financial enhancements made under the American Rescue Plan through 2025. For those 50-64 years of age, these subsidies provide an average savings of over $950 annually, and all consumers will continue to pay no more than 8.5 percent of their income on ACA health insurance premiums. The bill also would offer tax credits for ACA premiums to people who live in states that have not expanded their Medicaid coverage under the ACA but would otherwise qualify for the program.

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Home- and community-based care. The BBB bill contains additional funding for a Medicaid program that provides home- and community-based care services for eligible elderly Americans and people with disabilities. According to Kaiser Family Foundation estimates, there are more than 800,000 people on Medicaid waiting lists for these services across the country.

Paid leave. The House version of the legislation provides up to four weeks of paid leave for workers who need time to attend to caregiving or medical issues, including illness, the birth of a child or to take care of a sick loved one.

“We also thank the House for including paid leave in the bill they passed today, offering much-needed help to working family caregivers who are struggling to balance paid employment and caring for their loved ones,” LeaMond said.

Affordable housing. The BBB bill also includes investments to improve housing, with new funding to construct affordable housing – including units reserved for people ages 62 and older. The legislation also contains funding to upgrade and repair public housing and expand use of housing vouchers.

Connected devices. The legislation will provide subsidies to make it easier for eligible households to afford technology such as laptops and tablets to access high-speed internet.  Together with affordability programs and investments in expanded infrastructure, this program can help bridge the digital divide and ensure that more older adults have better access to telehealth, jobs and online services.

Free preschool and other benefits for children. The legislation includes funding to make preschool universal and free to all 3- and 4-year-olds. If enacted, it would be the largest expansion of public education since access to high schools was expanded nearly a century ago. Under the proposal, families would be able to select the program that best fits their needs and save thousands of dollars per year instead of paying for preschool.

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For families whose children are too young for preschool, the legislation would cap their costs for day care services at no more than 7 percent of their annual income.

The bill also would continue the monthly tax credits the American Rescue Plan created. Families would receive $300 per month for each child under age 6 and $250 for each child between 6 and 17.

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The BBB legislation will soon head to the Senate for a vote where if, as expected, it could be revised and the House would need to pass it again before it could go to the president's desk for his signature.

“Now we urge the Senate to take up this legislation and move toward a vote quickly," LeaMond said. "Older Americans have had enough with broken promises of reform – AARP and our nearly 38 million members will continue our fight for prescription drug reform until this bill is signed into law and implemented.”

Kenneth Terrell covers employment, age discrimination, work and jobs, careers, and the federal government for AARP. He previously worked for the Education Writers Association and U.S. News & World Report, where he reported on government and politics, business, education, science and technology, and lifestyle news.

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