Earlier this month, the U.S. Senate passed the Inflation Reduction Act and the House is expected to quickly follow. This new legislation marks the most significant national climate bill ever passed, while also improving access to affordable health care, creating jobs in manufacturing and clean energy, and putting downward pressure on the inflation and rising costs facing families across the country. All told, the provisions of the legislation will have outsized impacts on West Virginia families and workers.
The Inflation Reduction Act contains three major health coverage and prescription provisions that will have particularly important impacts for West Virginians: extensions of higher subsidies for people who purchase their health coverage through the individual health insurance marketplace, reduced prescription drug costs for Medicare beneficiaries, and funding for West Virginians with black lung disease.
The American Rescue Plan Act (ARPA) significantly increased federal subsidies for people who purchase their health coverage through the health insurance marketplace, but was set to expire in December without additional action from Congress. Under the Inflation Reduction Act, these improved subsidies are extended for three years. West Virginia was the fourth-largest beneficiary of the ARPA subsidy expansions, with 59 percent, or $143 million, of our 2022 total subsidies coming from the ARPA enhancements. As a result of the extension, approximately 23,000 residents will continue to receive higher subsidies resulting in lower health insurance premiums, and 5,000 West Virginians who were expected to lose their health coverage entirely because they could not afford it if the subsidies were not extended will remain covered.
Nearly one in five West Virginians (319,724) are enrolled in a Medicare Part D plan, which helps cover the cost of prescriptions, and thus will be impacted by the Inflation Reduction Act’s provisions to reduce prescription drug costs. It achieves these cost reductions by allowing Medicare to negotiate directly with drug manufacturers on prices, requiring that manufacturers provide rebates for drugs whose prices increase faster than inflation, capping out-of-pocket costs on prescription drugs at $2,000 per year, and eliminating copays for adult vaccines.
The legislation also includes a permanent extension of the Black Lung Excise Tax, which supports funding of the Black Lung Disability Trust Fund. This fund is well-known and critical in West Virginia, where it provides health insurance and a living stipend to coal miners with black lung and their families. In West Virginia, 4,423 coal miners and their families receive federal black lung benefits totaling over $38 million. While miners in 47 states receive these benefits, over 25 percent of the total annual program benefits go to West Virginia coal miners and their families, who are disproportionately impacted by black lung disease.
The Inflation Reduction Act provides a historic investment of $369 billion in climate-related provisions that are expected to reduce greenhouse gas emissions by at least 40 percent below their 2005 peak by 2030. It invests $260 billion in new and expanded clean energy tax credits for production of solar, wind, hydropower, and other sources of renewable energy. These credits will support both energy generation as well as manufacturing of renewable energy parts. There is also $80 billion allocated for new rebates for electric vehicles and energy efficient home appliances. Altogether, these provisions will create an estimated 9 million jobs over the next decade.
Environmental and Climate Justice Block Grants are available in disadvantaged communities and rural areas for community-led programs addressing harms from climate change and pollutants, which could provide opportunities for some West Virginia communities which have historically been most impacted by pollutants.
While the overall net climate effects of the bill are significantly positive, the legislation also mandates new oil and gas leasing, includes subsidies for carbon capture technology in fossil fuel plants, and is linked to a separate deal that could allow projects like the West Virginia Mountain Valley Pipeline (MVP) project to move forward.
These investments in climate and health, which will benefit all West Virginians, are funded through Medicare prescription drug savings and provisions to close tax loopholes and enforce the tax code.
The Inflation Reduction Act requires that corporations with average profits exceeding $1 billion pay a 15 percent minimum tax rate. Currently, around 200 large, profitable corporations pay less than that amount, and 55 corporations paid no federal income taxes in 2020. This provision will ensure that profitable corporations no longer pay a lower tax rate than the average working American.
The legislation will also provide funding to modernize the Internal Revenue Service (IRS) so it serves taxpayers better, by allowing the agency to narrow the gap between taxes legally owed and taxes paid. Nearly $600 billion of legally owed taxes go unpaid each year, and unpaid taxes are disproportionately owed by the wealthiest Americans. Lack of adequate funding at the IRS has resulted in audits on millionaires having fallen 71 percent since 2010, making tax-dodging even easier in recent years. West Virginia has the second fewest millionaires of any state in the country, meaning very few residents fall into that category, while the tax compliance rate for working- and middle-class people is very high.
The Inflation Reduction Act makes health and prescription coverage more affordable for many West Virginians, addresses the global challenge of climate change and energy costs simultaneously, and moves us toward a fairer tax system. Each of these provisions will have outsized impacts on West Virginians. But of note, provisions that also would have made a huge impact on our state’s families including an extension of the expanded Child Tax Credit, investments in child care and home- and community-based care workers, and paid family and medical leave were all left out of the final package. Each of those would have made it far more affordable for West Virginians to balance work and family. While we celebrate and support the overall package, we urge our federal lawmakers to continue working towards these additional, and imperative, supports.
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