NREI Fact Sheet: Inflation Reduction Act & Black America

Fact Sheet

Inflation Reduction Act & Black America

On August 16, 2022, President Biden signed into law the Inflation Reduction Act (the “IRA”), a longawaited budget reconciliation package meant to mitigate the cascading effects of climate change and blunt the harmful impacts of inflation. The new law–a slimmed-down version of the more ambitious Build Back Better Act–includes $369 billion in spending and tax credits for low-emission forms of energy to tackle climate change.1 It also caps prescription drug and insulin costs for Medicare beneficiaries; extends federal health-insurance subsidies; and grants Medicare unprecedented powers to negotiate prices with pharmaceutical companies for certain drugs.2 The legislation will also generate about $400 billion in revenue by imposing taxes on large corporations, amounting to a net federal deficit reduction by 2031.3 At the bill’s signing, President Biden, remarking that the IRA is “one of the most significant laws in our history,” declared the “American people won…” with its passage.4

Malik Neal, John R. Lewis Social Justice Fellow | January 2023

IRA WILL LOWER HEALTHCARE COST & EXPAND COVERAGE BY:

Providing a

3

YEAR extension of premium tax credits

Capping annual outof-pocket prescription drug costs at $2,000

An avalanche of research, however, demonstrates that significant racial disparities exist among the American people, especially in the areas of health care and climate change.5 In addition to suffering the worst effects of rising inflation, Black Americans still have higher uninsured rates than both white and Asian Americans.6 Moreover, Black Americans are 75% more likely than others to live in “fenceline” communities (areas near commercial facilities that produce odor, emissions, and noise).7 These facts make clear there is much work to be done to alleviate the conditions faced by Black Americans.

Expanding subsidy eligibility to individuals whose income is up to 150% of the federal poverty level

THE IRA WILL INVEST IN MITIGATING THE HARMS OF ENVIRONMENTAL JUSTICE BY FUNDING: 3

BILLION

in grants to clear up air pollution in port communities 3 BILLION in community-led projects 3 BILLION in Neighborhood Access and Equity Grants to migrate the negative impacts

While not perfect, the IRA is an important step forward. It will benefit Black communities in areas such as health care, climate change, and consumer energy costs. In the end, Black Americans stand to benefit from the IRA’s key legislative measures.

The IRA will benefit Black America by:

1. Lowering Health Care Cost & Expanding Coverage: Black Medicare beneficiaries are 1.5 to 2 times as likely as white beneficiaries to report difficulty affording medications and prescription drugs.8 Moreover, Black Americans are also due to experience the largest coverage losses with the expiration of The Premium Tax Credit Program granted in the American Rescue Plan (2021).9 These credits led to a record increase in enrollment for people with incomes below 150% of the federal poverty line.10

The IRA will:

• Provide a three-year extension (through 2025) of Premium Tax Credits.

• Cap annual out-of-pocket prescription drug costs at $2,000 and monthly costs for insulin at $35 for Medicare Part D enrollees

• Expand eligibility guidelines for full benefits for Medicare Part D Low-Income Subsidies, increasing the eligibility to individuals whose income is up to 150% of the federal poverty level

2. Investing in Mitigating the Harms of Environmental Injustices: Mitigating the harms of climate change remains vital for Black communities. Studies have shown Black Americans are exposed to higher levels of pollutants in the air, due in part to policies such as redlining.11 An astonishing 68% of Black Americans live within 30 miles of a coal-fired power plant, contributing to chronic health problems such as asthma and lung disease.12

THE

Snapshot: Louisiana is home to “Cancer Alley,” a 100-mile stretch of land along the Mississippi River containing the greatest concentration (130)of petrochemical refineries. The area, whose residents are predominately Black and poor, have the highest rate of air pollution-caused cancer in the United States.

THE IRA WILL REDUCE ENERGY COSTS BY: Funding 9 BILLION in a home energy rebate program, with a focus on low-income homeowners

The IRA will include:

• $3 billion in grants to clear up air pollution in port communities, which are often lower-income Black communities

• $3 billion in community-led projects and centers to address disproportionate environmental impacts

• $3 billion in Neighborhood Access and Equity Grants to migrate the negative impacts of transportation and construction projects in disadvantaged communities

Promoting TAX CREDITS to cover costs and upgrades

Funding 1 BILLION in grants to help state and local government to make affordable housing more efficient

3. Reducing High Costs of Energy and Utilities: Energy insecurity–the inability of a household to meet its basic needs—is a pervasive problem in the U.S., especially for Black Americans. Black households suffer from this problem at twice the rate of their white counterparts.13 The IRA will:

• Invest $9 billion in a home energy rebate program, with a focus on low-income homeowners

• Promote tax credits to cover the cost to install water pumps, solar panels, and upgrades to heating and cooling equipment

• Allocate $1 billion in grants to help state and local government to make affordable housing more energy efficient

In 7 states— Alabama, Georgia, Louisiana, Maryland, Mississippi, North Carolina, and South Carolina—at least 20% of Medicare beneficiaries are Black, which is twice the national average. In Washington D.C., over 60% of Medicare beneficiaries are Black.

Key Impact Highlights

Approximately 5 million Black Americans with Medicare Part D will benefit from a guarantee that their costs at the pharmacy are capped at $,2000 a year, starting in 2025.14

Over half a million Black Americans will remain insured thanks to the IRA’s three-year extension of premium tax subsidies for low-income individuals.15

Over half a million Black Medicare beneficiaries will now have their insulin costs capped at $35 for a month for supply.16

Black households can save up to 30% with tax credits for environmentally efficient home construction projects on insulation and other weatherization measures to prevent energy from escaping homes.17

Alabama, Florida, Georgia, Kansas, Mississippi, North Carolina, South Dakota, Tennessee Texas, Wisconsin, and Wyoming. Southern states have both some of the country’s highest uninsured rates and the largest Black populations.

Key Opportunity Gaps

Child Tax Credit: The American Rescue Plan (2021) increased and expanded the Child Tax Credit (CTC)–a program that provides automatic direct payments in the form of a child allowance to low-income families. The credit expired in December 2021, contributing to a 7% increase in child poverty among Black children.18 While the expansion of CTC was included in the original Build Back Better Act, it was not included in IRA.

Medicaid Converge Gap: The Affordable Care Act (2010) expanded Medicaid coverage to nearly all adults making less than $17,774 a year.19 Twelve states—overwhelmingly Southern—continue to refuse to adopt the expansion, leaving a coverage gap of over 2 million people. An amendment to the IRA to close the Medicaid gap ultimately did not receive the number of votes needed to be included in the final bill.20

Fossil Fuel Concessions: While the IRA focuses on bolstering clean energy and reducing overall U.S. emissions, it also mandates the leasing of large areas of public lands to oil and gas drilling.21 Additionally, the IRA ties solar and wind development to fossil fuel projects, meaning one cannot be done without the inclusion of the other. These concessions, included to secure votes for passage, will most likely incentivize the burning of fossil fuels in certain communities of color, according to some advocates.22

Conclusion

While important gaps remain in the Inflation Reduction Act, the legislation, as a whole, represents a meaningful step forward in addressing the climate, health, and economic challenges disproportionately impacting the Black community. By lowering health care costs, investing in programs to mitigate the harms of climate change, and reducing energy costs, the Inflation Reduction Act will benefit millions of Black Americans today and in the future

States who have refused to adopt the expansion of Medicaid include

ENDNOTES

1 Inflation Reduction Act of 2022, Public Law 117-169, 117th Cong., 2nd sess. (2022). https://www.congress.gov/bill/117th-congress/house-bill/5376/text 2 Id.

3 Congressional Budget Office. (2022). Estimated budgetary effects of H.R. 5376, the Inflation Reduction Act of 2022. https://www.cbo.gov/system/ files/2022-09/PL117-169_9-7-22.pdf

4 White House. (2022). Remarks by President Biden at signing of H.R. 5376, the Inflation Reduction Act of 2022. https://www.whitehouse.gov/briefingroom/speeches-remarks/2022/08/16/remarks-by-president-biden-at-signing-of-h-r-5376-the-inflation-reduction-act-of-2022/

5 See, Adepoju, O. E., Han, D., Chae, M., Smith, K. L., Gilbert, L., Choudhury, S., & Woodard, L. (2021). Health disparities and climate change: The intersection of three disaster events on vulnerable communities in Houston, Texas. International Journal of Environmental Research and Public Health, 19(1), 35. doi:10.3390/ijerph19010035; Williams, D. R., & Rucker, T. D. (2000). Understanding and Addressing Racial Disparities in Health Care. Health Care Financing Review, 21(4), 75–90. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4194634/

6 See, Lee, Munseob (2022). Do black households face higher and more volatile inflation? Economic Brief. Federal Reserve Bank of Richmond, No. 22-25. https://www.richmondfed.org/publications/research/economic_brief/2022/eb_22-25; Office of Health Policy, Dept. of Health. (2022). Health Insurance Coverage and Access to Care among Black Americans: Recent Trends and Key Challenges. https://aspe.hhs.gov/sites/default/files/ documents/08307d793263d5069fdd6504385e22f8/black-americans-coverages-access-ib.pdf

7 Patnaik, A., Son, J., Feng, A., & Ade, C. (2020,). Racial disparities and climate change https://psci.princeton.edu/tips/2020/8/15/racial-disparities-andclimate-change;

8 Tarzai, W., Finegold, K., Sheingold, S., De Lew, N., & Sommers, B. (2022, January). Prescription Drug Affordability among Medicare Beneficiaries. https:// aspe.hhs.gov/sites/default/files/documents/1e2879846aa54939c56efeec9c6f96f0/prescription-drug-affordability.pdf

9 Buettgens, M., Banthin, J., et al (2022, April). What if the American Rescue Plan Act Premium Tax Credits Expire. https://www.urban.org/sites/default/ files/2022-04/What%20If%20the%20American%20Rescue%20Plan%20Act%20Premium%20Tax%20Credits%20Expire.pdf

10 Id.

11 Lane, H., Morello-Frosch, R., Marshall, J., & Apte, J. (2022). Historical Redlining Is Associated with Present-Day Air Pollution Disparities in U.S. Cities (4th ed., Vol. 9, pp. 345-350, Rep.). doi:10.1021/acs.estlett.1c01012

12 Supra note 7.

13 Lewis, J., Hernández, D., & Geronimus, A. T. (2019). Energy Efficiency as Energy Justice: Addressing Racial Inequities through Investments in People and Places. Energy efficiency, 13(3), 419–432. https://doi.org/10.1007/s12053-019-09820-z

14 Kaiser Family Foundation. (2016, April). Profile of Medicare beneficiaries by Race and ethnicity: A Chartpack - Chartpack. https://www.kff.org/reportsection/profile-of-medicare-beneficiaries-by-race-and-ethnicity-chartpack/#:~:text=Nearly%20half%20of%20all%20black,among%20black%20 and%20Hispanic%20beneficiaries

15 Supra note 9.

16 Center for Medicare and Medicaid Services. (2021). Disparities in Diabetes Care Among Medicare Fee-for-Service Beneficiaries. No. 25. https://www. cms.gov/files/document/diabetes-disparities-data-highlight-2021.pdf

17 Congressional Research Service. (2022). Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376). R4702. https://crsreports.congress.gov/ product/pdf/R/R47202

18 Parolin, Z., Collyer, S.,(2022). Absence of Monthly Child Tax Credit Leads to 3.7 Million More Children in Poverty in January 2022 (2nd ed., Vol. 6, Poverty and Social Policy, pp. 1-5,). New York, NY: Columbia University Center on Poverty and Social Policy. https://static1.squarespace.com/ static/610831a16c95260dbd68934a/t/620ec869096c78179c7c4d3c/1645135978087/Monthly-poverty-January-CPSP-2022.pdf

19 Kaiser Family Foundation. (2022, September). Status of state Medicaid Expansion Decisions: Interactive Map. https://www.kff.org/medicaid/issuebrief/status-of-state-medicaid-expansion-decisions-interactive-map/

20 Leonard, K. (2022, August ). Sen. Raphael Warnock wants to tweak Manchin inflation deal to expand government-funded healthcare to 4 million people. https://www.businessinsider.com/warnock-tweak-would-further-expand-health-insurance-in-inflation-deal-2022-8

21 Supra note 1.

22 See, Lakhani, N. (2022, August ). Landmark US climate Bill will do more harm than good, groups say. https://www.theguardian.com/us-news/2022/ aug/09/us-climate-bill-fossil-fuel-harm-environment-biden; The Black Hive @ The Movement for Black Lives’ Statement on the Inflation Reduction Act (IRA). (2022). https://m4bl.org/statements/the-black-hive-the-movement-for-black-lives-statement-on-the-inflation-reduction-act-ira/

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