Brief Estimated Changes to Employer-Sponsored Health Insurance Premiums Due to the Drug Inflation Rebate Provision of the Build Back Better Act
Michael Simpson, John Holahan
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In this brief we estimate the impact of the prescription drug inflation rebates proposed in the Build Back Better Act (BBBA) on employer sponsored insurance plans. These rebates will lower the cost of health insurance premiums for employers and result in higher wages and additional tax revenues for the federal government. We use the Congressional Budget Office and Joint Committee on Taxation's (CBO/JCT) projections of increased tax revenues to estimate the increases in wages implied and find that total wages would be $111 billion higher between 2022 and 2031. We also estimate the changes in employer premiums, both in billions of dollars and as a percent of baseline premiums. Assuming that savings in premiums are all passed on to employees as wages, there would also be a reduction in premiums of $111 billion between 2022 and 2031. This amounts to 1.1% of projected employer premium spending without a change in policy.

Research Areas Health and health care Taxes and budgets
Tags Health insurance Private insurance Medicare Federal budget and economy Federal tax issues and reform proposals Health care spending and costs
Policy Centers Health Policy Center