The Inflation Reduction Act is a Climate Bill – and Health Systems Need to Act on It

There is no point in trying to focus on any other topic – we need to talk about the Inflation Reduction Act (IRA). The name’s obvious political hijinks aside, this is an outstanding climate bill, and a decent healthcare bill.

First, it more than pays for itself, with $490B of new spending, more than offset by $764B in savings and new revenue. (Amazingly, Congress passed an important bill that also decreases the deficit.)  Second, there is a lot in the bill that does not have to do with climate, (Affordable Care Act subsidies, expansion of the Medicare prescription drug benefit, allowing Medicare to negotiate drug prices, etc.) But for me, and likely those of you reading this, what is important is almost $400B dollars in incentives to transition the economy toward electricity and renewables.

Let’s take a step back, and remember, that last year, the President signed the infrastructure bill into law. That bill designated $50B for climate resilience and weatherization, as more frequent and severe droughts, heat waves, floods and wildfires ravage the country. That is about adaptation, important, but not about reducing the emissions of greenhouse gases. That bill also had $65B for clean energy and grid-related investments, and $7.5B to build a national network of charging stations for electric vehicles.

In addition, the government’s new corporate average fuel economy (CAFÉ) standards will require “an industrywide fleet average” of almost 49 miles per gallon for 2026 models. This has, and will, put a lot of pressure on the car industry to switch to plug in hybrids, and fully electric vehicles.

That is all before the IRA.

I can’t cover the whole bill here – but it includes:

• $30B in production tax credits for solar panels, wind turbines, batteries and critical minerals processing
• $10B in tax credits to build clean technology manufacturing facilities
• $500 million to be used through the Defense Production Act for heat pumps and critical minerals processing.
• A means-tested $7,500 tax credit to make new electric vehicles more affordable, and a $4,000 tax credit for used electric vehicles
• A methane fee that drive companies to eliminate methane leaks during production and transportation, which will start in 2025.
• $60B to address the disproportionate burden of pollution on low-income communities and communities of color
• $27B for a “green bank” aimed at delivering financial support to clean energy projects
• $20B for programs that can cut emissions in the agriculture sector

From the consumers perspective – think about this for your own home:

The High-Efficiency Electric Home Rebate Program will offer up to $8000 to install heat pumps that both cool and heat your home. If your current water heater runs on gas, you can get a $1750 rebate on an air source heat pump water heater.  Need new wiring to support all of this? There is another $2500 dollars available for that, and $1600 available for insulating your home. Want to go fully electric – and make the air in your home so much cleaner and healthier – then take that last step and ditch your gas stove, and replace it with an induction stove, and get $840 in credits. Add solar panels and you get a 30% tax credit, and the same for back up batteries.

And remember – the $7500 dollar rebate you can get for buying a new car.  Replace two cars and electrify your home – and you might be able to get more than $30,000 dollars in rebates from the government.

So yes – this bill is big, and the work of the whole last year is incredible.

But it is not enough. Most analysts say the bill will only get us a little over 40% reduction in emissions by 2030.  We need to get to 50% to have a chance at keep the planet under a 15% increase in warming by 2050.

Health systems need to act on three things:

1. Inform your employees, partners, patients, and entire community about the benefits of the bill, and help get these dollars into your community. People will have lower energy costs, those costs will be consistent (electric prices do not swing wildly like oil and gas prices do), the environment will be healthier, and you will lower morbidity and mortality caused by breathing in fossil fuel particulates.
2. Take advantage of these credits yourself. We strongly recommend eliminating scope 2 emissions by engaging with a utility to build out wind and solar for your health system through a “power purchase agreement.” Those rebates will go to the builder – but that means that your costs will be lower, and your hedge on electric costs will be even better.
3. Don’t let the bill allow you to become apathetic. It is a great bill – but it does not solve the problem. The government has gone a long way (admittedly further than I expected), but this still needs to be solved in your community. People need to take up the gauntlet and do the work to get these credits. And we still need to work on eliminating a lot more greenhouse gases.

Let’s celebrate – and then get to work!