The remains of President Biden’s Build Back Better agenda were revived with last week’s Senate passage of the Inflation Reduction Act, which is expected to become law.
Here’s the vew from our experts on what the bill means in the near and short term for Americans:
- The climate and clean energy provisions in this bill take the type of meaningful action on climate that the market—and Democrats—have been demanding for some time. While the package does not adopt mandatory reduction targets—and the full effect of many of these provisions won’t be felt before the midterms—getting this bill across the finish line will likely check the box on climate action for many voters.
- Democrats have directly decreased health care expenses for millions of Americans while upholding the promises of the ACA at a time of rising costs in many sectors. While passage of the bill offers Democrats some much needed momentum, its impact on the midterms is unclear; most of its health provisions won’t go into effect before next year.
The bill’s climate provisions:
- Adopt a graduated scale for some clean energy tax credits.
- Adopt, for the first time, a series of technology-neutral, performance-based energy credits, creating flexibility for any technology to claim a credit if certain emissions reduction thresholds are met.
- Include credits that will spur growth in targeted sectors, including hydrogen, sustainable aviation fuel and energy storage.
- Include $60 billion in environmental justice funding.
After years of piecemeal extensions, energy tax policy will remain largely static for the next 10 years (barring Congressional action), allowing project sponsors and technology developers to plan against a longer-term horizon.
Health care-wise, the bill:
- Extends Affordable Care Act (ACA) health insurance premium tax credits through 2025, greatly increasing health insurance affordability for many Americans.
- Allows Medicare to negotiate lower prices for some high-cost prescription drugs starting in 2026.
These provisions will decrease costs for seniors and help millions of Americans avoid higher health care premiums. Democrats’ attempts to cap the out-of-pocket cost of insulin broadly, however, were blocked.