Washington is as polarized as ever, but there is one area of growing bipartisan consensus: Lawmakers on both sides of the aisle are coming together to oppose a controversial board created by last year’s health car overhaul law.
The Independent Payment Advisory Board was created to take difficult decisions about cutting Medicare spending out of the hands of legislators and give the powers to a panel of appointed, independent experts.
However, as California Democratic Rep. Pete Stark recently explained, the board is “unprecedented abrogation of congressional authority to an unelected, unaccountable body.”
If left in place, the IPAB will have the power to stifle innovation and harm seniors’ access to medical care. It must be repealed, and several bills have been introduced, led by Rep. Phil Roe, R-Tenn., to eliminate the powerful board before it is even established.
The IPAB will be comprised of up to 15 experts – to be appointed by the president and confirmed by the Senate – and will be tasked with making binding recommendations to reduce Medicare per capita spending if costs exceed defined targets, beginning in 2014.
Lawmakers can override or amend the board’s recommendations only with a supermajority vote in both houses, and it has a limited time period to pass legislation with alternative cuts that would meet the spending targets. If Congress does not act in the required timeframe, IPAB’s recommendations automatically become law.
IPAB will ultimately determine whether millions of seniors have access to care. And while the board has unprecedented power, it is limited in what it can do to reach its targets.
The IPAB cannot modernize the program’s outdated fee-for-service structure or make recommendations to improve Medicare’s operations. Instead, its tools are limited to cutting Medicare payment rates for those providing services to beneficiaries.
Even though the legislation creating the board says it is technically barred from “rationing,” the IPAB’s payment decisions inevitably will result in de facto rationing as doctors and hospitals are forced to limit access to services.
The health law entrenches cuts in Medicare payments for physicians. Next year, doctors face a 29.5 percent pay cut from Medicare, with more cuts scheduled every year. The Medicare actuary’s office admits this will “likely have serious implications for beneficiary access to care” and could cause 40 percent of providers to go out of business or stop seeing Medicare patients by 2050.
Seniors in many regions already are having difficulty finding physicians to see them. IPAB will make things worse. Are seniors prepared for this?
Responsibility for Medicare payments belongs in the hands of Congress. As Rep. Allyson Schwartz, D-Pa., recently wrote in a letter to her colleagues, “Congress … must assume responsibility for legislating sound health care policy for Medicare beneficiaries. Abdicating this responsibility would undermine our ability to represent the needs of the seniors and disabled in our communities.”
Both sides agree that spending on Medicare and other entitlement programs must be contained. The debate is over how. There are two competing visions for reform.
Under the president’s top-down approach, IPAB experts will make decisions that will affect tens of millions of seniors and progressively limit their access to care through price controls and de facto rationing.
Under the bottom-up approach recently unveiled by House Budget Chairman, Rep. Paul Ryan, R-Wis., seniors would choose from private plans competing for their business, just as members of Congress do today. Seniors would receive an annual subsidy – which would be adjusted and targeted based on age, income, health status, and similar considerations – to purchase a Medicare-approved health plan. Seniors are guaranteed coverage.
The basis for this “premium support” model is 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 subsidies so seniors can select the drug plan that best suits their needs. The plans compete on benefit design and price, and seniors have proven themselves to be smart and savvy shoppers.
The Congressional Budget Office projects that Part D will cost taxpayers about 46 percent less than originally estimated for the period 2004-13. And Part D’s competitive model is saving seniors money as well. The average monthly beneficiary premium for Part D coverage will be $30 in 2011, far below the original forecast of $53.
Recent polls show that 84 percent of Part D enrollees are satisfied with their coverage, and 95 percent say their coverage works well.
A modernized Medicare program built on this model could give seniors the security of coverage without stifling innovation and harming patient access to care.
There’s little doubt that IPAB will fail. As health economist Alain Enthoven recently explained, “These 15 central planners are unlikely to do as good a job as hundreds of doctors and managers in local delivery systems working with incentives to improve value for money for their enrolled members.”
As lawmakers look for ways to make Medicare sustainable for the future, they can look to the Part D model of competition and choice. The first step is to scrap the IPAB, with its government-appointed experts and their top-down, centralized control over Medicare.
Published in The Orange County Register, August 15, 2011.