PROVIDENCE, RI – After passing through Congress with no Republican support, President Joe Biden signed the historic Inflation Reduction Act into law on August 16, 2022.

The Inflation Reduction Act (P.L. 117-169) is a monumental, forward-looking investment divided into three interwoven baskets: climate action; prescription drug reform; and tax fairness.  Some key provisions of the law are geared toward helping individuals lower their health, energy, and tax bills.  Other initiatives are designed to incentivize communities, businesses, and industries to adopt more efficient and environment-friendly practices.  The law also includes major public investments to strengthen our energy grid and put more clean energy infrastructure into service.

In its first year, the law has already begun to achieve real cost-savings for American families and businesses, spurred economic growth, and accelerated a transition to clean energy that confronts climate change and strengthens America’s energy independence.

Nearly a year after the landmark law was passed, U.S. Senator Jack Reed says the Inflation Reduction Act is already paying  major dividends for the American people, the U.S. economy, and the environment.

Reed noted the law’s positive impacts include: saving Americans money; lowering health insurance premiums and making prescription drugs more affordable; creating good-paying jobs; and delivering climate solutions to make America a world leader in clean energy, clean air, and clean water.

“From lowering medical costs to protecting the planet to energizing our economy in a way that creates more good-paying jobs here in Rhode Island, the Inflation Reduction Act is working and delivering for the American people.  This was a historic investment in American innovation and our workforce.  It is electrifying our transportation sector and revitalizing American manufacturing,” said Reed, who voted for the law, along with every Senate Democrat and Independent member of the U.S. Senate.  “One year in, we are making real progress.  The Inflation Reduction Act is making the economy work better for working people.  But we can’t let up.  To maximize the benefits of the law it must be wisely and effectively implemented in a well-coordinated manner.  We need a sustained, strategic commitment to delivering these economic, health, and environmental benefits for all.”

The inflation surge that began under the Trump Administration rose as high as 9.1 percent last summer as the nation emerged from the economic turbulence of the pandemic.  Today, under President Biden, inflation is down to about 3 percent.  Meanwhile, unemployment is around a 50-year low, the stock market is booming, manufacturing investment is up, and even against the headwinds of Federal Reserve interest rate increases, the economy grew at a healthy rate of 2.4 percent in the second quarter of this year.

“Since the law was passed, inflation is down while jobs and economic growth are rising.  The Inflation Reduction Act was a real turning point for climate action and clean energy investment that will help lower pollution and harmful emissions for generations to come,” said Senator Reed.  “We’re not proclaiming ‘mission accomplished’ because we’ve still got so much work to do.  The law needs effective implementation and wise allocation of resources.  But we are recognizing the positive momentum and encouraging states and the private sector to partner with the federal government to power our economy forward.”

Reed highlighted several ways the Inflation Reduction Act is having an impact, including:

HEALTH CARE & LOWERING DRUG PRICES

The Inflation Reduction Act’s drug pricing reforms are lowering health care costs for the American people.  To help people struggling to afford their medications, the law stands up to the pharmaceutical industry and finally grants Medicare the right to use its purchasing power to negotiate lower drug prices for consumers; capping seniors' out-of-pocket drug costs; and limiting annual price hikes on life-saving prescription drugs.

The law also is also reducing health care premiums for 13 million Americans purchasing coverage through the Affordable Care Act.

After over a decade of runaway rising prices that quadrupled out-of-pocket spending in Medicare between 2007 and 2020, the new law, caps a month's supply of Medicare-covered insulin is at $35.  Additionally, under the Inflation Reduction Act, recommended, preventive vaccines are now free for seniors with Medicare prescription drug coverage.

A Rhode Island family with two adults, two children, and a household income of $75,000 could save $2,832 on their premiums next year. Without the Inflation Reduction Act, their premiums would have increased by 71%.  Meanwhile, a single-parent household with one adult, one child, and a household income of $30,000 could save $1,260 on their premiums next year. Without the Inflation Reduction Act, their premiums would have increased by 477%.

Starting in 2025, the law caps the annual out-of-pocket costs for prescription drugs covered by Medicare Part D for beneficiaries at $2,000 per year.  There are about 74,000 Rhode Islanders enrolled in the Medicare Part D prescription drug plan, according to data from the Centers for Medicare and Medicaid Services.

ECONOMIC BENEFITS FOR RIers

Rhode Island is already a national leader in offshore wind.  The Inflation Reduction Act will bring an estimated $4.1 billion of investment in large-scale clean power generation and storage to Rhode Island between now and 2030.  It provides a historic set of tax credits that will create jobs across solar, wind, storage, and other clean energy industries.  These credits include bonuses for businesses that pay a prevailing wage, so that Rhode Island workers earn a good paycheck as we build the clean energy future in America.

Rhode Island is getting $63.8 million to support residential adoption of energy efficiency and home electrification. Under the law, states administer these federal rebates and benefits. Rhode Island's Office of Energy Resources is the state agency responsible for overseeing and distributing the clean energy funds from the Inflation Reduction Act.

Based on data from the Rocky Mountain Institute, the Inflation Reduction Act could create about 3,800 jobs in Rhode Island in 2030.

Rhode Island has already received over $25 million to help state and local governments invest in energy efficiency and grid resilience thanks to the Inflation Reduction Act and the Bipartisan Infrastructure Law, and has the opportunity to apply for several more grant opportunities in the coming months.

RENEWABLE ENERGY DEVELOPMENT, ENERGY SECURITY & CLIMATE CHANGE MITIGATION

The Inflation Reduction Act also lowers energy costs while tackling the climate crisis. The law invests $369 billion to tackle the climate crisis in addition to saving the average American family an estimated $1,025 per year on energy costs by 2030.  The law is already lowering the price of solar, wind, and other sources of renewable energy, making them increasingly cost-competitive.

The law provides:

  • Ten years of tax credits to make homes energy efficient and run on clean energy, making heat pumps, rooftop solar, electric HVAC and water heaters more affordable
  • Tax credits of $7,500 for a new electric vehicle or $4,000 for a used electric vehicle
  • $9 billion for home efficiency programs, focused on low-income consumers, to electrify home appliances and for energy efficient retrofits
  • $1 billion grant program to make affordable housing more energy efficient, based on Senator Reed’s Green Retrofits Act
  • $60 billion to boost clean manufacturing in the United States, and more.

To help Rhode Islanders access the information they need to utilize the new law, Reed's office launched a new online Inflation Reduction Act resource hub on clean energy discounts, incentives, rebates, and tax credits for residents and local businesses to save big while going green.

“This new resource hub is a one-stop shop for unpacking, understanding, and applying for Inflation Reduction Act programs. This webpage can be found at www.Reed.Senate.gov/IRA,” said Senator Reed.  “The Inflation Reduction Act will help people lower their energy costs, combat climate change, bolster America's energy independence, and strengthen U.S. manufacturing. I am committed to ensuring that working families and communities reap the economic gains of clean energy investments.  This web page is a tool to connect more Rhode Islanders with the incentives and benefits that will make energy efficient upgrades more affordable and stimulate local manufacturing to meet increased demand on the pathway toward a cleaner energy future.”