The law ensured that 63,000 Virginians were able to keep their health insurance, reduced the cost of insulin for over 36,000 seniors, and incentivized several manufacturers to invest in the state and create more clean energy jobs.
One year ago today, the Inflation Reduction Act (IRA) was signed into law.
The legislation represented the largest-ever investment in fighting climate change, lowered health care and prescription drug costs, raised taxes on corporations, and boosted funding for the Internal Revenue Service to go after wealthy tax cheats.
The bill was passed with only Democratic votes—including Virginia Sens. Tim Kaine and Mark Warner, and every Virginia Democrat in the House. Every Virginia Republican in Congress voted against the bill, despite its potentially transformative impact on the economy and the nation’s clean energy infrastructure.
“The Inflation Reduction Act was one of the most consequential pieces of legislation passed in decades, and in just one year it’s already paying huge dividends for the American people, for our economy, and for our climate,” Senate Majority Leader Chuck Schumer (D-NY) said in a statement. “Democrats are proud of the progress we’ve made in implementing our agenda, and we will keep working until every American feels the benefits.”
Here are some highlights of how the Inflation Reduction Act has impacted Virginia:
Lower Health Care and Prescription Drug Costs
The Inflation Reduction Act extended generous subsidies that helped make Affordable Care Act (ACA) health insurance plans more affordable for working- and middle-class families.
Those subsidies were introduced as part of Biden’s American Rescue Plan of 2021, and were set to expire at the end of last year, but the IRA extended them through the end of 2025.
Roughly 63,000 Virginians were set to lose their individual coverage and become uninsured had those subsidies expired at the end of 2022, but thanks to the Inflation Reduction Act, those people got to keep their insurance.
The IRA also reformed Medicare to lower drug costs for many of the roughly 1.1 million Virginia seniors with Medicare Part D coverage, which covers prescription drugs.
For example, beginning this past January, all vaccines covered under Medicare Part D are free, and the bill implemented a $35 monthly cap on insulin for Medicare recipients.
As a result, 36,461 Virginia seniors on Medicare who use insulin are now charged no more than $35 per month for an insulin prescription.
The IRA will also implement a $2,000 cap on Medicare recipients’ annual out-of-pocket prescription drug costs, beginning in 2025. In Virginia, an estimated 390,400 seniors are expected to save $441 a year each due to this provision, according to an analysis by the US Department of Health and Human Services.
Fighting Climate Change and Saving Families Money on Energy
Arguably the most critical element of the IRA is its provisions to reduce emissions that cause climate change and drive extreme weather events. The law aims to do this by establishing a mix of tax credits for companies and rebates for consumers in order to make the manufacturing and consumption of clean energy technologies and products cheaper.
In other words: by making clean energy—like solar, wind, and hydropower—cheaper to produce and use, the IRA seeks to hasten the transition away from fossil fuels that are one of the biggest sources of emissions.
For example, under the law, manufacturers get subsidies for building electric vehicles (EVs) and renewable energy products, and utilities get credits for choosing solar and wind energy over fossil fuel plants.
The law’s various measures are expected to lead to a clean energy jobs boom and the IRA could create up to nine million jobs over the next decade. In Virginia, the IRA could create as many as 31,255 jobs by 2030, according to data from the Rocky Mountain Institute.
In Virginia, several manufacturers have already taken advantage of the IRA’s incentives.
For example, Swedish-Swiss corporation ABB invested $6 million into a new 65,000-square-foot manufacturing, testing, and repair facility in Mechanicsville. According to the company, the facility will employ nearly 100 skilled production workers when at scale.
ABB’s motion traction division creates a range of electrified equipment, such as converters and batteries for the railway transportation industries. The division also creates electric off-road construction machinery for mining and electrical buses. Once fully operational, workers will be tasked with building smaller pieces of equipment and assembling them into larger components that are installed into the machinery.
The IRA also provided $80 billion in financial rebates for millions of households to adopt those clean energy products, such as electric vehicles, solar panels, and more efficient heat pumps.
If consumers claim all the subsidies offered in the law, they could save more than $1,800 on their annual energy bill on average, according to an analysis by Rewiring America, a climate analysis group.
According to the Virginia Department of Motor Vehicles, there were 55,823 EVs registered in the state as of March 31. In June 2022, there were roughly 40,000 registered EVs–a nearly 40% increase in nine months.