Health Care Advocate Ted Doolittle speaks during an Aug. 30, 2021 press conference to criticize proposed health insurance rate hikes. Attorney General William Tong, left, and then-State Comptroller Kevin Lembo stand behind. Yehyun Kim / ctmirror.org

Congress on Friday passed Democrats’ major bill aiming to reduce inflation that will in part lower health care costs for those enrolled through the Affordable Care Act and Medicare. But as lawmakers in Connecticut praised the federal relief, they’re also raising concerns about proposed rate hikes that could affect plans for thousands of people in the state.

Connecticut Democrats are celebrating the “Inflation Reduction Act” after more than a year of negotiating a bill that has taken many different forms and also includes a tax policy overhaul and climate change provisions. But while Americans could see some tangible benefits in the near future, much of the health-related programs will have a much slower phase-in.

The most immediate benefit is the extension of the enhanced Affordable Care Act subsidies for three years. That boost was created under Democrats’ federal pandemic relief plan in 2021 — the American Rescue Plan — and was set to expire at the end of 2022. The continuation of the financial assistance is expected to save Connecticut households about $220 per month on premiums, according to Social Services Commissioner Deidre Gifford.

The rest of the health care components will take several years to be implemented. The bill will affect thousands of Connecticut residents who are enrolled through the state exchange — Access Health CT — as well as seniors on Medicare.

The bill also allows Medicare to negotiate prescription drug prices for the first time in history. It will initially apply to 10 drugs starting in 2026 and then the number will increase each year through 2029. The bill will also cap out-of-pocket prescription drug costs at $2,000 per year starting in 2026. About 19,000 people in Connecticut currently spend more than $2,000 out of pocket annually.

Pharmaceutical companies have argued this will stifle innovation and the creation of the new drugs, but Gifford cited the Congressional Budget Office report that says it won’t have “a significant impact” on new medication for the next three decades.

While those measures will take much longer, drug companies will need to pay Medicare a rebate starting next year if costs increase more than the rate of inflation year over year. According to Gifford, there are 700,000 people in Connecticut who receive health care through Medicare.

The legislation sought to more broadly cap the out-of-pocket costs for insulin at $35 per month, but enough Senate Republicans voted to block it so that it wouldn’t apply those with private insurance. Now, the co-pay cap only applies to Medicare recipients who need the diabetic drug, which will begin in 2025 and cover about 35,000 people in the state, according to Gifford.

Connecticut has its own law that caps out-of-pocket prices for insulin at $25 per month. It applies to some residents who have private insurance like those enrolled through the state exchange but doesn’t for those who have plans that are federally regulated.

But as Congress expands some health-related benefits, state officials are worried about potential rate hikes sought by insurers that are an average increase of 20.4% on next year’s individual health plans.

The Connecticut Insurance Department will review the proposed 2023 rates at a meeting on Monday. The agency says the plans in question cover about 206,000 residents in the state. Members of the public will be able to watch or attend the high-profile meeting in Hartford, and officials will be able to ask questions of the insurers. The Insurance Department is expected to make a decision in September whether to accept them, approve a smaller hike or reject them entirely.

“This should be a time for the people of Connecticut to get an explanation as to why premiums need to be so high,” Connecticut Health Care Advocate Ted Doolittle said in an interview.

“There’s a lot of pressure on the Insurance Department to make sure the rates are as low as they can be,” Doolittle added. “The burden of proof is on the insurers to show why the price they ask for is rock bottom and inevitable.”

At a Thursday press conference touting the health care benefits in the Inflation Reduction Act, Lamont said the Insurance Department will take a “very hard, strict look” at the carriers’ requests. He noted that the federal legislation could take the pressure off of hospitals, which then in turn pass on the costs to the insurers.

“I like to think of this Inflation Reduction Act, for example, reducing the number of uninsured. That’s less of a cost the hospitals will have to pick up now,” Lamont said. “That may reduce the asks of the insurance companies.”

“We have a long way to go on inflation, but I think the Inflation Reduction Act will make a big difference and is a big difference not just this year but at least the next few years” he added.

As part of the reasoning for rate hikes, some of the insurance companies, including ConnectiCare, pointed to the expected lapse of ACA subsidies that were set to go away by 2023. ConnectiCare, which only sells individual plans on the state exchange, is seeking an average increase of 25.2% for plans that are currently covering 8,782 people.  

Kimberly Kann, a spokeswoman for ConnectiCare, said in a July statement that there were legislative and regulatory factors that were out of the company’s control, like the anticipated expiration of the expanded ACA subsidies by the end of the year.

“Our proposed rates are based on several factors, including medical and pharmacy cost trends, along with the continued impacts of COVID-19 on our members’ utilization of services, including obtaining delayed care,” Kann said at the time.

“Also, the legislative and regulatory environments continue to present market challenges outside of the company’s control, including the loss of the enhanced Advanced Premium Tax Credits provided through the American Rescue Plan Act set to expire in 2022, and state-mandated benefits,” she added.

But Blumenthal and other critics picked apart that argument at a Friday morning news conference since Congress ultimately adopted the legislation extending those subsidies for another few years. They also pointed to the insurance companies making record profits as a reason for the Insurance Department to reject the suggested increases.

“The request for this huge rate increase collapses like a house of cards under the slightest scrutiny,” Blumenthal said. “If you look at the basis for it, the insurance companies are presuming there will be no extension of the current subsidies when Congress literally today will give final approval of that extension through 2025. … And yet insurance companies are betting on Congress’ failure.”

While Lamont and other state officials specifically focused on the health provisions, the Inflation Reduction Act is also one of the most expansive climate bills in recent history, providing tax incentives to produce clean energy and buy electric vehicles.

The bill passed the closely divided Senate on Sunday, prompting the House to come back to Washington from their month-long recess. The lower chamber approved the legislation in a party-line vote on Friday evening.

While the bill’s main purpose is intended to reduce inflation, it left out a lot of Democratic priorities in order to strike a deal with key negotiators. A major concession was taking out early education and family-related programs like child care subsidies, a national paid leave program, universal pre-kindergarten and the continuation of monthly payments of enhanced child tax credits.

Republicans have been vehemently opposed to the legislation and cite some reports from economists that it’ll have little to no effect on reducing inflation.

“Biden-Blumenthal inflation is hurting Connecticut, and this latest behemoth spending package is another example of Democrats putting extremist Progressive policies over the wellbeing of the American people,” newly minted GOP Senate nominee Leora Levy said in a statement.

The Connecticut Mirror/Connecticut Public Radio federal policy reporter position is made possible, in part, by funding from the Robert and Margaret Patricelli Family Foundation and Engage CT.

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Lisa Hagen is CT Mirror and CT Public's shared Federal Policy Reporter. Based in Washington, D.C., she focuses on the impact of federal policy in Connecticut and covers the state’s congressional delegation. Lisa previously covered national politics and campaigns for U.S. News & World Report, The Hill and National Journal’s Hotline. She is a New Jersey native and graduate of Boston University.