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The Inflation Reduction Act, recently signed into law by President Biden, is a landmark moment in our effort to address climate change and improve American health care. Because the bill is so dense, we thought it would be useful to detail the enormous benefits the law will generate for families, homeowners, seniors, small businesses and communities across Maryland and the country.
In the climate arena, the new law’s provisions mean families could save hundreds of dollars each year on their energy bills. New clean energy production will accelerate, bringing down the cost of electricity, and the average household will see up to $220 in annual savings from lower electricity bills and reductions in the costs of goods and services over the next decade, according to an analysis by Resources for the Future. Heat pumps and electric stoves will cost significantly less, thanks to new tax credits.
Communities of color and low-income neighborhoods are a major focus of the law. It provides targeted support — through state and local governments, and through green banks — aimed at increasing access to energy efficiency improvements and affordable renewable energy in historically underserved and overburdened communities. The economic development potential of this support at the individual household level is significant, through job creation, lower energy bills and long-term ownership of neighborhood-based solar projects.
The law also helps make electric vehicles more affordable to lower- and middle-income families by expanding a key tax credit. Many people interested in electric vehicles may be concerned about the cost. With these tax credits, these vehicles’ costs will be well in line with the prices for other gas-fueled vehicles. The legislation will also create many more charging stations, making electric vehicles more practical for drivers.
People looking for a well-paid career will begin seeing more opportunities for jobs in the clean-energy sector, building and servicing solar and wind energy infrastructure. In Maryland, planned offshore wind projects alone are expected to generate thousands of good jobs in manufacturing and other sectors.
And small business owners will also receive climate-related benefits. The law provides new tax credits for the purchase of electric vehicles, which can save businesses money over time; it also provides tax incentives to install electric charging stations at business locations.
The legislation will also provide a range of health-related benefits to many Americans, through better access to care and reduced costs. To start, the measure gives Medicare the ability to negotiate some drug costs for seniors, saving money for the program — and taxpayers — and bringing down out-of-pocket costs for Medicare members.
The law will also cap the total out-of-pocket drug costs for Medicare recipients at $2,000 annually, which will provide new peace of mind for many Americans who struggle to pay for their medications. At a recent event, a retired State Police officer detailed how he has spent more than $35,000 annually on prescriptions needed to treat Parkinson’s disease. This legislation means he and many others in Medicare will save thousands of dollars a year on drugs.
If you’re on Medicare and use insulin, the law helps you as well, by capping out-of-pocket expenses for insulin at $35 a month. Additionally, seniors and people on Medicare will no longer have to pay for vaccines, thanks to the law, another significant savings for many.
Maybe you pay for health insurance through the Affordable Care Act exchanges. About 13 million middle- and lower-income people in that category will continue to pay affordable premiums, thanks to the legislation. These subsidies — coupled with similar subsidies created by the state of Maryland — will help thousands of people here continue to be able to afford their premiums.
Finally, taxpayers should note that the legislation is fully — and fairly — paid for. Taxes on average Marylanders will not be affected, but the law will require the largest billion-dollar corporations, many of which find ways to avoid paying taxes, to start paying a minimum tax.
The Inflation Reduction Act takes the side of working people and small businesses over polluting fossil fuel companies, big Pharma and other mega-corporations. In short, it will put money back in hardworking Americans’ pockets at a time when they are dealing with high inflation.
We congratulate President Joe Biden, Vice President Kamala Harris, Senators Chris Van Hollen and Ben Cardin, House Majority Leader Steny Hoyer, and the other Maryland Democratic US Representatives who recognized the urgent need to act to address climate change and improve health care in the U.S.
Maryland has been a leader in addressing climate change and expanding access to affordable, high-quality health care. The Inflation Reduction Act offers major funding to states, and we urge our incoming governor and legislators to take advantage of this opportunity to continue to address climate change and deliver real benefits to Marylanders.
Vincent DeMarco (demarco@mdinitiative.org) is president of the Maryland Health Care for All! Coalition. Lynn Heller (lynn@climateaccessfund.org) is CEO of the Climate Access Fund, a Baltimore-based nonprofit green bank, and chair of the Board of Directors of the Maryland League of Conservation Voters.