Critics, CBO Warn Democrats’ Inflation Reduction Act Could Slash US Medical Innovation

Critics of Democrats’ Inflation Reduction Act, as well as the Congressional Budget Office (CBO), are warning that the bill’s health care provisions could cause medical innovation in the United States, which leads the world in the sector, to decline sharply.

The measure, hammered out as a compromise agreement between moderate Sen. Joe Manchin (D-W.Va.) and Senate Majority Leader Chuck Schumer (D-N.Y.), serves to fulfill a series of broad Democratic aspirations: increasing federal revenue by closing so-called tax loopholes, enacting climate change policies, expanding the Affordable Care Act, and reducing prescription drug prices.

Its supporters say the legislation also will help to slow the growth of the ballooning U.S. national debt by decreasing the deficit.

While it authorizes about $433 billion in new spending, Democrats’ internal estimates suggest that the bill will bring in around $725 billion in new revenue to the federal government, thus reducing the federal deficit and slowing the growth of the national debt. Specifically, Democrats estimate that the bill will reduce the deficit by about $292 billion annually.

Though less far reaching in tax code changes, climate policies, and health care policy changes than the $1.75 trillion Build Back Better Act that preceded it, the Inflation Reduction Act would still entail one of the largest changes to federal health policy in many years.

Democrats have been sanguine about the long-term effects of these new policies on the U.S. health care system; others, however, suggest that the bill will bring about an array of unintended consequences.

Wide-Reaching Changes to US Health Policies

Even after the Senate parliamentarian gutted several provisions in the original draft of the bill, several policy analysts have called the Inflation Reduction Act the most substantial change in U.S. health care policy since the passage of the Affordable Care Act.

Central to Democrats’ legislative ambitions are

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