On Medicare, the Right Role for Congress

In late April, erstwhile Obamacare champion Rep. Allyson Schwartz became the fourth Democrat in Congress to support legislation repealing the Independent Payment Advisory Board (IPAB), a powerful new body established by President Obama’s health care law. IPAB assumes much of the Medicare cost-cutting powers previously endowed to Congress.

In a letter to her colleagues, the congresswoman wrote that “[C]ongress is a representative body and must assume responsibility for legislating sound health care policy for Medicare beneficiaries.” She continued: “Abdicating this responsibility would undermine our ability to represent the needs of the seniors and disabled in our communities.”

Schwarz is right to have concerns about turning so much power over to a board that will have little or no accountability to seniors impacted by its decisions.

IPAB will be composed of 15 presidential appointees. Putting a panel of bureaucrats in charge of decisions over how taxpayer dollars will be spent is offensive to the very idea of accountable government.

The Constitution gives the power of the purse to Congress ā€” not the president. IPAB would turn this principle on its head. And Obama has proposed giving IPAB new powers to sequester congressionally authorized funds.

If Congress is ready to reassert its constitutional responsibilities, it will need a serious plan to reform entitlement spending. Medicare alone is facing $30 trillion in unfunded liabilities.

Fortunately, House Budget Committee Chairman Paul Ryan has provided a comprehensive plan for doing just that. Rep. Ryan’s budget proposal would transform Medicare into a patient-centric program.

The key to Ryan’s plan is premium support, which provides seniors with an annual subsidy to purchase a Medicare-approved health plan. A premium support system enables enrollees to apply the government’s contribution to the health plan of their choice while bringing the power of market competition to bear on rising health costs.

This same concept is already at work in the popular Medicare Part D program, in which private companies compete to offer prescription drug benefits to seniors.

Created in 2003, Part D provides a range of choices and a subsidy that works much like Ryan’s proposal. Seniors can select the drug plan that best suits their needs. The plans compete on design and price. And Medicare Part D is costing taxpayers 40 percent less than originally projected.

Opponents of the Ryan plan have objected that he’s “voucherizing” Medicare. But this misunderstands the proposal. In contrast to vouchers, premium support allows for more flexible subsidies that can be adjusted and targeted to seniors based on their age, financial well-being, health status and similar considerations.

Make no mistake: Medicare and other entitlement programs are on track to gobble up virtually the entire federal budget. To survive, Medicare must be changed, whether under IPAB and rationing built into the president’s health-care law or Ryan’s plan. The difference will be who controls health-care dollars ā€” distant government bureaucrats or seniors themselves.

Obama’s top-down approach uses regulations to dictate prices and allocate spending, surely leading to lower quality, less innovation and waiting lines to access care. Ryan’s plan takes a bottom-up approach, cultivating individual choice, forcing providers to compete to offer seniors the best value in health care and ensuring that taxpayer money is wisely spent.

IPAB is at the center of the conflict between two worldviews. Do we entrust individuals with the decisions for their own care? Or do we entrust those decisions to yet another government panel of “experts” in Washington?

Published in the Richmond Times-Dispatch, May 11, 2011.

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