CT’s Lamont touts federal legislation intended to cut drug costs and extend health insurance. Here’s what it does.

Hartford — Gov. Ned Lamont on Thursday said federal legislation intended to reduce drug costs and extend health care subsidies will make a significant impact on Connecticut residents.

The measure, called the Inflation Reduction Act, was scaled back after President Joe Biden’s Build Back Better legislation stalled in Congress earlier this year.


This version, which addresses health care costs and climate change, passed the Senate last weekend with united Democratic backing and unanimous Republican opposition, forcing Vice President Kamala Harris to cast the tie-breaking vote. It awaits a vote in the House of Representatives that’s expected to approve it and send it to Biden for his signature.

“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,” Lamont said. “It’s an extraordinary opportunity to bring down your health care costs every day.”


The governor disputed the conclusions of a study by the University of Pennsylvania’s Wharton School that the legislation would very slightly increase inflation until 2024 and decrease inflation later. It called estimates “statistically indistinguishable from zero, thereby indicating low confidence that the legislation will have any impact on inflation.”

Lamont said the measure, which Democrats tout as a major election-year legislative victory, will cut health care costs and help reduce inflation. However, several provisions don’t kick in for several years, exposing it to potential change in the future by a Republican majority in Congress.

Social Services Commissioner Deidre Gifford said Connecticut residents will benefit from the legislation in three ways. It requires Medicare to negotiate prices of 10 to 20 of the most expensive prescription drugs, lowering costs for Medicare patients beginning in 2026, she said.

PHrMA, the industry group, called the provision government price setting, leading to policies that would “dictate prices and choose winners and losers when it comes to which diseases are likely to see new treatments.”

The legislation caps out-of-pocket drug costs to $2,000 a year, Gifford said. That policy will affect 19,000 Medicare patients in Connecticut beginning in 2026. In addition, out-of-pocket costs for insulin are capped at $35 a month beginning in 2025, affecting 35,000 Connecticut residents, she said.

And drug companies will be required, beginning next year, to pay a rebate to Medicare if the price of their drugs increases more than the rate of inflation year over year, affecting 700,000 state residents, Gifford said.

State officials and federal lawmakers backing the legislation say rising drug prices are a key component of increased health care costs. However, Paul Pescatello, executive director of the Connecticut Bioscience Growth Council at the Connecticut Business & Industry Association, said drug costs save money that would otherwise be spent for surgery, home health care and other costs.

Price controls would chill investment by pharmaceutical companies looking to move to the growing bioscience community in the New Haven area, he said.


“Saying we want to control drug prices is not going to encourage drug companies coming to Connecticut,” Pescatello said.

And he criticized efforts to force pharmaceutical companies to bargain over pricing on a playing field he said is not level because of Medicare’s tremendous size and institutional and market power.

“It’s not a negotiation,” he said. “It’s a gun-to-the-head of the pharmaceutical industry,” he said.

The legislation seeks to reduce health care costs by extending for three years the premium subsidy for insurance purchased on the state’s health insurance exchange, or Access Health CT. The enhanced federal subsidy was set to expire at the end of the year, leading to higher premiums.

The premium subsidy will save a household using the health exchange an average $220 a month, Gifford said.

Without the pandemic rescue plan subsidies, 24,000 of the 104,000 people enrolled through Access Health would have been uninsured, Gifford said. Premiums also are capped as a percentage of household income.

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And subsidies will be extended to more residents based on income, providing $15 million a month in Connecticut, Gifford said.

Lamont criticized double-digit health insurance rate increases sought by several carriers.

“We can’t afford that. The state can’t afford that. Individuals can’t afford that,” the governor said.

The Connecticut Insurance Department has scheduled a hearing Monday and rate decisions will be handed down in early September.

Gerard O’Sullivan, director of consumer affairs at the Insurance Department, said the agency is conducting a “deep actuarial analysis of the costs” submitted to the agency and future trends on which insurers are basing their prices, he said.

“We’re pushing back very hard against the insurance companies and the trend analysis that they submitted to the department,” O’Sullivan said.


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