Inside IPAB: Obama’s Bureaucratic Rationing Board

Published June 1, 2012

Until the passage of President Obama’s health care law, Congress was the only entity allowed to change what Medicare paid physicians and other health care providers for treating Medicare patients. Now, unless the Supreme Court strikes down ObamaCare in its entirety in June, that power will be handed off to a group of unaccountable political appointees.

The Independent Payment Advisory Board (IPAB) created under Obama’s law consists of a 15-member committee designed to ration health care to seniors by lowering Medicare reimbursement rates. Unlike Congress, IPAB will be able to change the pay rates for Medicare services without having to worry about electoral ramifications.

Unless the Supreme Court finds Obama’s law unconstitutional in its entirety, the IPAB will remain in force, and the window for eliminating it is closing. The law established a window for Congressional repeal, where any bill to repeal IPAB must be introduced within the one-month period between January 1 and February 1, 2017. If introduced, it must be enacted by a three-fifths super-majority no later than August 15, 2017.

Medicare ‘Terminator’

According to Doug Perednia, a physician and author of Overhauling America’s Healthcare Machine: Stop the Bleeding and $ave Trillions, the IPAB was designed to be immune from political threats because the architects of the law believed the board should be free from accountability in order to make difficult and likely unpopular decisions undisturbed by representative politics.

“The IPAB is obligated to reduce Medicare spending by $500 billion. However, by law it has no means of doing so other than by reducing payments for the goods and services provided to beneficiaries. This amounts to rationing of care, but it’s a hidden, covert form of rationing. The benefits may still be available on paper, but there will be few clinicians who will be willing or able to provide them without facing financial ruin. Seniors will face long waits for these services if they can get them at all,” Perednia said.

According to Perednia, the decision to make the IPAB unaccountable serves another important purpose: It insulates Congress, which was more than happy to hand off the decision-making power to an unelected, unaccountable board.

Members of Congress are thus the real and intended beneficiaries of this approach, Perednia says, as they will be free to decry the devastation caused by the Board while explaining they are powerless to do anything about it. In that respect, he says, the law was carefully designed. 

“The Obama administration and the Democratic majority in Congress specifically prohibited future legislators from eliminating the Board except during a one-month period in 2017. In that sense they crafted the perfect ‘Terminator’ for Medicare: Autonomous, unaccountable, destructive, and yet nearly impossible to kill,” Perednia said.

Bureaucrats Know Best

Scott Gottlieb, a resident fellow at the American Enterprise Institute, testified at a recent hearing before the House Energy & Commerce Committee that under IPAB the ability of health care providers to offer care to patients will be affected by reimbursements being cut for particular services. He also predicted payments to doctors and other health care providers will be driven so low in some settings that certain services won’t be available because physicians won’t be available to take patients.

“We need to have an open, rigorous, and transparent process for making these decisions. IPAB, instead, aims to freeze stakeholders out of this process,” Gottlieb said.

Devon Herrick, a senior fellow and health economist for the National Center for Policy Analysis, agrees, saying IPAB serves a political role rather than an economic or medical purpose.

“IPAB was created because politicians in Washington specifically believe that individuals and doctors cannot make sound medical choices. Instead of empowering doctors and patients, Washington thinks fifteen unelected, unaccountable bureaucrats know better,” said Herrick.

Comparative Effectiveness Enforcement

Dr. Roger Stark, a physician and policy analyst for the Washington Policy Center, says IPAB is essentially the tool the government will use to carry out comparative effectiveness research (CER), which is designed to inform health-care decisions by providing evidence on the effectiveness, benefits, and harms of different treatment options.

“Of course, the ‘best practices’ will be based on cost, not necessarily what is best for the patient,” said Stark. “About 50 percent of ObamaCare is financed by a $580 billion cut to Medicare over the next 10 years. The IPAB is critical to deciding how health care for our seniors is rationed so costs can be contained.”

Lowered Reimbursements, Longer Wait Times

Jonathan Ingram, a health care policy analyst for the Illinois Policy Institute, notes Obama’s law authorizes IPAB to cut Medicare reimbursement rates. The kicker is that in many cases, reimbursement rates are already below the cost to deliver services.

“When IPAB lowers these rates, doctors may choose to opt out of Medicare altogether, leaving seniors with few options to receive quality care. As the baby boom population ages and more doctors opt out, more and more patients will be competing for fewer and fewer doctors willing to see them,” said Ingram.

“We’ve already seen this happen in Medicaid, the federal health program for the poor. Even when those on Medicaid can get an appointment, they’re forced to wait months to actually see the doctor,” Ingram said. “We’ve already seen the future IPAB promises. It’s not just ugly, it’s deadly.”