From lower prescription costs to cleaner power, here’s what the federal ‘Inflation Reduction Act’ means for Maryland

A landmark federal climate and health bill that got final approval from Congress on Friday includes everything from a cap on Medicare patients’ costs for insulin to tax credits for manufacturing solar panels and support for offshore wind power.

The U.S. House of Representatives approved the $740 billion package Friday by a party-line 220-207 vote, after the Senate approved it along party lines earlier this week. U.S. Rep. Andy Harris, a Republican, was the only Maryland congressman to vote against the bill.


“It’s been a long and winding road, but the Inflation Reduction Act is almost at the White House door,” U.S. Sen. Chris Van Hollen of Maryland said Thursday in Baltimore.

Van Hollen spoke at a news conference organized in support of the legislation, where he was joined by fellow Democratic Sen. Ben Cardin, local government leaders and representatives of several Maryland organizations, including those focused on health and the environment.


Joshua Harris, vice president of the NAACP Maryland State Conference, said the measure “is going to be huge for our country and for Marylanders” by reducing the nation’s carbon footprint and creating jobs.

“We know that pollution has drastically and disproportionately impacted low-income communities of color, when we talk about asthma rates, when we talk about flooding that we’ve experienced right here in Baltimore City,” Harris said. “This will work to make sure that we are impacting those communities positively, and the economic impact is tremendous.”

The package is less ambitious than President Joe Biden’s original domestic vision but still meets deep-rooted party goals of slowing global warming, moderating pharmaceutical costs and taxing big corporations. Biden is expected to sign the bill into law this week.

Name aside, nonpartisan analysts have said the 755-page bill would have a minor effect on surging consumer prices.

Republicans say the bill’s business taxes would hurt job creation and force prices skyward, making it harder for people to cope with the nation’s worst inflation since the 1980s.

The bill contains a number of provisions that will affect Maryland residents and the local economy.

Health care subsidies

For the past year, people across the country have been tapping extra federal subsidies included in a COVID relief package to buy cheaper health insurance on local exchanges. Average monthly premiums for so-called Obamacare plans in Maryland dropped to $300.

The boost led to a record 180,000 Marylanders enrolling, up 11% from pre-pandemic days, according to the Maryland Health Benefit Exchange, which operates the state’s exchange.


The tax credits were available to low and also some middle-income residents, largely people who don’t get coverage through their employer. But the subsidies were to expire at year’s end, costing most enrollees some financial assistance, according to federal estimates.

A provision tucked into the bill will keep the subsidies going for three more years.

“The Inflation Reduction Act will be an enormous help to all Marylanders who purchase their own health insurance,” said Michele Eberle, executive director of the Maryland Health Benefit Exchange.

Health care advocates say extending subsidies will be vital for many to maintain coverage. The exchange also estimates many of the 357,000 Marylanders still lacking any coverage would qualify for low-cost plans or free coverage under Medicaid, the federal-state health care program for the poor.

Prescription drug cost benefits

Seniors in Maryland and across the country enrolled in federal Medicare plans could see significant savings on their prescription drug costs under the bill.

For the first time Medicare would be allowed to negotiate prescription drug prices, beginning with 10 drugs in 2026 and rising to 20 drugs by 2029 and after.


Drug companies also would have to pay rebates to Medicare if they hiked prescription prices faster than inflation beginning in 2023. Cost increases for half of all drugs covered by Medicare exceeded the inflation rate in 2019 and 2020, according to the Kaiser Family Foundation.

Together the provisions are expected to save Medicare hundreds of billions of dollars over a decade. How much saving is passed onto individual seniors depends on how many and which drugs have lower prices or smaller price increases, Kaiser said.

More directly for seniors, the legislation caps annual out-of-pocket prescription costs at $2,000 beginning in 2025. The price of insulin through Medicare would be capped at $35 a month and vaccinations would be free beginning in 2023.

Democrats wanted to apply the insulin cost cap and inflation measure to private plans, but those provisions were dropped.

The negotiated drug prices, however, could inform work underway by the Maryland Prescription Drug Affordability Board, created by the General Assembly in 2019 to assess how to control prescription costs for everyone, said Vincent DeMarco, president of the Maryland HealthCare for All Coalition.

For its part, the drug industry says the federal legislation could have negative effects, such as curbing investment in new drugs.


“These warnings are largely not true, but that is not to say this legislation won’t have an impact on how the industry does business,” said Jonathan P. Weiner, professor of health policy and management in the Johns Hopkins’ Bloomberg School of Public Health.

“It will go a long way to decreasing prescription drug costs for many seniors in the Medicare program, with less out-of-pocket costs for many, and decreased future drug price inflation for all.”

The environment

The Inflation Reduction Act could have a major environmental impact on Maryland, which already set ambitious emissions reduction goals in recent years. This bill makes it cheaper for consumers to install solar panels, purchase an electric car and buy a more efficient water heater, while also funding improvements to energy infrastructure and equipment at ports like Baltimore’s.

What really excites Gil Jenkins, a spokesman for Hannon Armstrong, is the stability it will bring to the renewable energy and green technology industries. Hannon Armstrong is a publicly traded firm based in Annapolis that says it invests solely in “climate change solutions.”

For years, the country has had a mishmash of tax credits and incentives that are extended every few years, creating a “topsy-turvy market,” Jenkins said, but the Inflation Reduction Act puts 10-year guarantees on several incentive programs.

Colette Hayward, CEO of Maryland Solar Solutions, and Rick Peters, CEO of Solar Energy Services, both said the bill would have an immediate impact on Maryland’s solar energy industry. Federal tax credits for home solar panel installation are currently slated to decrease, then disappear, Hayward said, which would have “hamstrung” the industry.


Instead, Peters said Maryland is uniquely poised to benefit from the bill because of state income tax credits already offered to Maryland residents who install solar panels.

”We can invest in our businesses [knowing] that we have a 10-year runway of solid federal support,” he said.

On an earnings call last week, Constellation CEO Joseph Dominguez called the bill “clearly transformational” for the Baltimore-based energy company. Constellation touts itself as the nation’s biggest single producer of nuclear energy and has a nuclear plant in Calvert County.

Dominguez called the Inflation Reduction Act, which will subsidize the production of nuclear energy, a “win-win-win” because it will retain and create jobs in nuclear energy, lower costs for consumers and help the country in “our fight against the climate crisis.”

The bill also will benefit the state’s nascent offshore wind industry, said Brady Walker, the head of government affairs and strategy for Ørsted in Maryland. Ørsted is a Danish company building a massive wind farm off the Delmarva coast. The bill includes tax incentives for domestic parts production and funding to improve electricity transmission.

Jamie DeMarco, federal policy director at the Chesapeake Climate Action Network, noted $2.25 billion in the bill will go toward reducing emissions in ports, including the electrification of certain machines and heavy-duty vehicles that transport cargo.

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“Baltimore City is going to benefit tremendously from that reduction in air pollution,” DeMarco said. “Those vehicles are highly polluting per mile traveled and they’re concentrated in our city.”

Cap remains on state and local property tax (SALT) deduction

Shortly after President Donald Trump took office in 2017, a Republican Congress imposed a $10,000 cap on how much individuals could deduct from their federal taxes to offset state and local property taxes. The so-called SALT deduction was particularly popular in politically blue states like Maryland, New Jersey and New York.

This year, with a Democratic president and a Democratic Congress, three U.S. House Democrats from New York and New Jersey had vowed to oppose any significant tax measure that didn’t increase or remove the cap. But in recent days they signaled support for the bill even without the tax cap’s removal.

The legislation and its host of tax provisions “seemed like the clearest opportunity for the Congress to revisit and reset this issue,” said Michael Sanderson, executive director of the Maryland Association of Counties. “That they didn’t seems to speak loudly that there is no congressional consensus to do so.”

Marylanders are more likely than those in other states to claim the SALT deduction. In 2017, 47% of taxpayers in the state did so, according to the Tax Policy Center. Those with high incomes are also more likely to, with more than 90% of those earning more than $200,000 claiming the deduction, according to the same analysis.

In 2018, Maryland Attorney General Brian Frosh, a Democrat, joined other states in suing over the $10,000 cap, but the lawsuit was unsuccessful. At the time, Frosh said the cap was “an attack on state sovereignty” that would increase taxes for nearly 600,000 Marylanders.


The Associated Press contributed to this article.