Inflation Reduction Act: What's in the climate, health, tax bill Congress just passed

With a vote of 220 to 207, the U.S. House of Representatives passed the Inflation Reduction Act on Friday. The vote marks the last step before President Biden's desk for a bill that will devote hundreds of billions of dollars over the coming decade towards the fight against climate change, reducing the cost of prescription drugs, and cutting the deficit.

The IRA, as it's known, will also alter the U.S. tax code's treatment of big corporations.

Sens. Chuck Schumer (D-NY) and Joe Manchin (D-WV) surprised the world on July 27 when they released their sweeping bill. On Aug. 4, Sen. Kyrsten Sinema (D-AZ) propelled the deal closer to the finish line when she announced she would support the bill after making a few tweaks.

The IRA is a far cry from some early Democratic ambitions but nonetheless marks a giant win for Biden and Democrats just a few months before November's midterm elections.

Just a few weeks ago, the effort appeared all but dead. Now it's on the cusp of becoming law, marking a historic action on climate change that's projected to save trillions in the coming decades.

Here's what the IRA will do:

About $370 billion for climate change and energy efforts

The centerpiece of the bill is a giant allocation toward climate change and energy efforts. Schumer has noted repeatedly that this bill “will be the largest action on climate change ever passed by the Congress.”

If enacted, it will spread money all around the green economy, from $9 billion toward a program to retrofit homes to $20 billion to manufacture more electric vehicles. Automakers like GM (GM), Tesla (TSLA), and Toyota (TM) are expected to benefit from the money as well as the expansion of a $7,500 EV tax credit included in the deal.

US Senator Krysten Sinema, Democrat of Arizona, speaks during a hearing on the nominations of Shalanda Young to be Director and Nani Coloretti  to be Deputy Director of the Office of Management and Budget at the US Capitol in Washington, DC, on February 1, 2022. (Photo by BONNIE CASH / POOL / AFP) (Photo by BONNIE CASH/POOL/AFP via Getty Images)
US Senator Krysten Sinema, Democrat of Arizona, speaks during a hearing on the nominations of Shalanda Young to be Director and Nani Coloretti to be Deputy Director of the Office of Management and Budget at the US Capitol in Washington, DC, on February 1, 2022. (Photo by BONNIE CASH / POOL / AFP) (Photo by BONNIE CASH/POOL/AFP via Getty Images) · BONNIE CASH via Getty Images

The bill also has provisions that would impact the energy industry more widely, including new rules around federal land sales that may lead to oil drilling and a fund to permanently extend the Black Lung Disability Trust Fund. That will help many former coal miners in Manchin’s home state of West Virginia. In total, the bill has many provisions that even the oil industry has gotten behind.

Late in the process, according to multiple news reports, Sinema secured an additional $5 billion in the bill to combat droughts around the country. The provision will be welcomed in her home state of Arizona and others in the Southwest that are suffering a drought that, by one measure, is the worst in 12 centuries.

Changes to the health care system

The bill also makes significant changes to the health care system. One key provision will allow Medicare to negotiate for prescription drug prices. Current law prohibits Medicare from intervening in the talks between drug makers and health plan sponsors. The new rules would allow the government to weigh in to push down prices and save consumers — and the government — billions.