Democrats expect their Build Back Better agenda to have a major impact on American lives, but even if party leaders manage to cobble together the final votes to pass this presidency-defining bill, many of its most important provisions will not take immediate effect.
The bill would give Medicare the power to negotiate with pharmaceutical firms for lower prescription drug prices, for instance. But even though it’s possibly the most popular policy in the bill, it wouldn’t start until 2025. New price limits for insulin wouldn’t kick in until 2023, while more generous coverage for seniors through Medicare Part D would start in 2024.
Some start dates reflect the difficulty of standing up complicated new policies, many of which require states to draw up new social welfare programs from scratch, like child care subsidies, which involve a sliding eligibility scale for parents and new rules for providers. In other cases, delays and early expirations served as budget gimmicks to reduce the perceived price tag over the next 10 years.
These dates also spell a bit of a political problem for Democrats, who view Build Back Better as their best argument for keeping control of the House and Senate in next year’s elections. It’s probably easier to tout the benefits of the party agenda if the benefits are tangible rather than something to look forward to.
The legislation isn’t finished, with taxes, major climate policies and paid leave still unresolved — plus, the bill awaits rulings from the Senate parliamentarian. She may rule that some provisions, including parts of the prescription drug proposal, violate the complex rules for the “budget reconciliation” process Democrats are using to pass the bill.
But if Democrats pass a final version of Build Back Better in the coming weeks, much of it will resemble the bill that passed the House on Friday.
Not everything would be delayed under the House bill ― some of the most important policies would take effect almost right away.
Starting in 2022:
Child Allowance: Monthly cash payments to most parents via the expanded child tax credit would continue under the bill. Every month since July, parents have received $300 per child under 6 years old and $250 per child ages 6-18. The benefits will be higher in 2022, based on an inflation adjustment, but Democrats authorized them for only one year, meaning they’ll have to do another extension for 2023 and beyond.
Affordable Care Act Improvements: The American Rescue Plan temporarily bolstered the financial assistance available to people buying private insurance on their own, through “Obamacare” exchanges, by making more people eligible for subsidies and offering bigger subsidies to people already getting them. Most of these changes were set to expire after 2022, though some were set to expire at the end of 2021. Build Back Better extends them all through 2025.
“Medicaid Gap” Coverage: A dozen states, mostly in the South, still have not expanded Medicaid to cover all people with incomes below or just above the poverty line, as the Affordable Care Act envisioned. Starting in 2022, they can get private insurance through the exchanges, at no cost and with virtually no cost-sharing ― in effect, giving them a private version of Medicaid. That initiative, like the other Affordable Care Act enhancements, lasts through 2025.
New Taxes: New taxes would kick in for corporations and people with annual incomes exceeding $10 million, as well as people who use nicotine products. Many high-income households would get a tax cut, however, because Democrats plan to restore a federal deduction for state and local taxes. The corporate taxes include a new international minimum tax and a levy on stock buybacks.
Child Care Subsidies: New financial assistance would become available in states that decide to participate in the new federal initiative. (They could start any time of year, just as soon as they formulate their implementation plans and get federal approval.) For 2022, subsidies could be available to families with incomes as high as their state median, which would be about $134,000 a year for a family of four in New Jersey and $69,000 a year in New Mexico. The eligibility threshold would rise each year after that, until, starting in 2025, roughly 9 in 10 families would be eligible for assistance. (And it would stay that way until 2027, when the funding runs out.)
Starting in 2023:
Hearing Coverage: Medicare Part B would begin to cover hearing services, including one hearing aid per year. Estimates suggest about half of all seniors on Medicare do not have such coverage currently. Democrats opted against including vision and dental coverage, however.
Insulin Price Cap: Insurers, including private insurers offering drug coverage through Medicare Part D, would be prohibited from making patients pay more than $35 out of their own pockets for insulin products. For the first two years, the requirement would apply only to insulin products that insurers already cover; starting in 2025, it would apply to all insulin products.
Penalties For Drug Price Inflation: Starting this year, manufacturers that raise prices for single-source drugs beyond the average inflation rate for other goods and services will have to pay a rebate to the government. The idea is to stop manufacturers from raising prices so quickly, and the caps would apply to what drugmakers charge private insurers as well as public programs ― unless that provision runs into trouble with the Senate parliamentarian.
Starting in 2024:
Paid Family Leave: Four weeks of paid family or sick leave for all workers in the private sector would become available starting in 2024, under the House-passed bill and as planned for the Senate version. But Sen. Joe Manchin (D-W.V.) still doesn’t support Democrats’ paid leave proposal, putting the entire thing at serious risk of being cut. If it does pass, the benefit would be paid out either through a new federal program or through existing state and employer plans, at different rates depending on the worker’s past earnings.
Better Drug Coverage For Seniors: Medicare Part D, the portion of the program that covers drugs, will start capping out-of-pocket expenses at $2,000 a year per senior. This should help the roughly 1.5 million seniors who, according to a Kaiser Family Foundation analysis, would spend more than that in a single year.
In 2025 and beyond:
Drug Price Negotiations: Starting in 2025, Democrats’ bill instructs the Department of Health and Human Services to negotiate prices for 10 drugs off a list of drugs made by a single manufacturer. Those prices would apply for recipients of Medicare Part B and D as well as Medicare Advantage. In 2026 and 2027, HHS will negotiate prices for 15 drugs, and then for 20 drugs in the years after.
Home And Community-Based Services: States could start using extra money from the federal government in order to bolster programs that allow the elderly and people with disabilities to work, go to school, live outside of institutions and, more generally, participate fully in society. A primary goal is to reduce and potentially eliminate the long wait for the services that exist today because they receive so little funding.
Pre-Kindergarten: This is the other part of the early childhood program and, like the child care portion, depends on state participation. States can start to tap federal money right away, but the serious dollars don’t become available until 2025. As with the child care funding, the money stops flowing again after 2027.