President Obama is doubling down on one of the most dangerous provisions in his 2010 health overhaul law, the Independent Payment Advisory Board (IPAB) which will become Medicare’s rationing board.
In his proposed budget, the president plans to give greater powers to the panel to cut Medicare spending even more deeply than his health overhaul law already does.
The IPAB is one of the most egregious parts of ObamaCare because it puts rationing of care on autopilot. The House of Representatives is slated to vote on a bill that would repeal the IPAB this month, but the legislation faces an uncertain fate in the Senate and an almost certain veto by the president.
Nonetheless, opposition to the IPAB crosses party lines. Rep. Frank Pallone (D-NJ), a top Democrat on health policy issues, has said he has no interest in defending the board: “I’ve never supported it, and I would certainly be in favor of abolishing it.”
The IPAB is to be composed of 15 appointed officials who will have the authority to make cuts in Medicare payments if per capita spending exceeds defined targeted rates. The U.S. Constitution gives the power of the purse to Congress so that elected representatives can be accountable to the voters for their decisions. The IPAB would turn this principle upside down.
In creating the IPAB, the president and Democrats in Congress wanted to take difficult decisions about cutting spending on Medicare out of the legislative process. In so doing, they gave unprecedented authority to unelected experts to make Medicare payment policy involving hundreds of billions of dollars and impacting tens of millions of seniors.
The power is unprecedented because there is to be no judicial, administrative, or realistically, congressional review over its decisions. The IPAB is supposed to take decisions outside the political arena, but that violates Article I of the Constitution that puts spending decisions exclusively in the hands of elected members of Congress.
Even with its huge powers, the tools available to the IPAB to cut spending are limited. The board cannot make structural recommendations to improve how Medicare operates; it is barred from making changes that would modernize the program’s outdated fee-for-service structure or change beneficiary incentives.
The only tool it will realistically have will be cutting Medicare payment rates for those providing services and medicines to beneficiaries. This will inevitably ration access to physicians and medical treatments.
Between 2013 and 2020, the health law directs the IPAB to achieve its spending-reduction targets through cuts to the Part D prescription drug program, Medicare Advantage, and skilled nursing facility services. Since the board is forced to reduce overall Medicare spending by focusing only on these relatively smaller segments of Medicare spending, the cuts would have to be very deep to achieve overall per capita spending reductions.
IPAB is the wrong approach. IPAB needs to be repealed, not strengthened. It should be replaced with market-oriented reforms that actually address the pernicious incentives now driving Medicare off a fiscal cliff.
A smarter approach would be to make changes to Medicare on the model of the program’s Part D prescription drug program that cultivates individual choice, forces providers to compete to offer seniors the best value in health care, and provides a path to sustainability for Medicare.
Serious reform proposals that would give seniors more choice and control over their health coverage have recently been offered by Rep. Paul Ryan (R-WI) and Sen. Ron Wyden (D-OR) and by Sen. Tom Coburn (R-OK) and Sen. Richard Burr (R-NC).
Instead of one-size-fits-all government plans, individual seniors could purchase a health plan of their choosing from among competing plans. All of the programs would be structured to protect seniors who are older, poorer, and sicker. Seniors would be empowered to shop for coverage that best fits their particular medical needs. And Medicare would harness the same competitive market forces that have brought down prices and driven up quality in virtually every other sector of the American economy.
The president’s budget goes in completely the opposite direction by strengthening its centralized government command-and-control approach. Instead of instituting reforms that would address the real cost problems in Medicare, he is funneling power to a select group of unelected experts who would surely make changes that could seriously compromise access to care and innovation.
Repeal of IPAB is the first step to clear the path for the modern reforms that put doctors and patients, not government bureaucrats, in charge of decisions.
Published in the Hawaii Reporter, March 6, 2012.