Obama’s Message: The Bureaucrats Will Save Us

Published May 5, 2011

In response to House Budget Chairman Paul Ryan’s proposed Path to Prosperity, President Barack Obama delivered a hastily constructed address to the nation last week stressing that he too has a plan to cut the federal budget deficit. Unfortunately, his approach consists of doubling down on two deficit-cutting methods that history shows don’t work: empowering unelected bureaucrats, and raising taxes on the middle class.

The president said he wants Americans to “live within our means.” For the great majority of households, who must balance their expenditures without the luxury of borrowing from China or just printing more money, this is hardly a bold statement. Yet Obama’s position is that living within our means is impossible without empowering unelected bureaucrats to make the tough decisions for us.

As Obama told The New York Times in 2009, referring to the possibility of denying his grandmother a costly hip replacement, “It is very difficult to imagine the country making those decisions just through the normal political channels.” Thus it should be up to bureaucrats to decide who gets a hip replacement and who doesn’t.

In simple terms, Obama doesn’t think either democracy or personal choices within a market can hold down costs. Where Ryan would apply the lessons of the cost-saving prescription drug benefit to reform Medicare by empowering citizens, giving them more choices and a greater stake in the care they receive, Obama offers a top-down approach: A bureaucratic board, protected from the whims of constituents and Congress, will deny people services.

The Independent Payment Advisory Board (IPAB) was roundly denounced as a “death panel” approach, based on the experience of its predecessor in the United Kingdom, known as NICE. IPAB is perhaps the least popular element of Obama’s health care law—which is at its lowest popularity yet, according to a recent Associated Press poll, with only 35 percent of Americans supporting it. The idea was viewed with skepticism even by Obama’s own staff. As one former Obama administration official told Kaiser Health News after the speech, “I thought IPAB would be out of favor after awhile, and now it’s back with a vengeance.”

The staffers were right to be skeptical. Past experience with prior boards, even those with more limited purview, shows that care-restricting recommendation power lasts only until people find out about its effects. Experiences with the Medicare Payment Advisory Commission (MedPAC) and the Agency for Healthcare Research and Quality (AHRQ) show what happens when reports demanding cutbacks are publicized: Congress responds by heeding the calls of constituents, smacking down the bureaucrats. When the AHRQ decided that surgery to relieve back pain was unnecessary, Congress promptly stripped its guidelines of any enforcement power.

Ignoring this history, last week Obama called for investing vast new powers in IPAB to crack down on those seniors with their costly demands, starting in 2014—oddly, still exempting hospitals from IPAB control until 2020. (Surely it’s just a coincidence that these same large hospitals overwhelmingly supported his health care legislation.) And to further insulate the bureaucrats from those pesky citizens, Obama’s plan would prevent Congress from overruling IPAB except through legislation containing equal cost reductions and passed by overwhelming majorities. And there would be no avenue for patients or their legal advocates to challenge IPAB decisions.

The idea of an unelected board with so much power is unnerving. Even Democrats who supported Obama’s health care law, such as Rep. Pete Stark (D-CA), call IPAB a “dangerous provision” that “sets [Medicare] up for unsustainable cuts.” Yet in spite of the history and the fact that even the U.K. is abandoning this model, Obama remains confident that bureaucrats will do what politicians can’t.

There are two ways to lower health care costs: by empowering consumers to make choices and foster competition in a transparent marketplace, or by cracking down with the clumsy, brutal hand of bureaucracy to deny care. Obama chose the latter for his health care law, and last week he doubled down.

For his sake, let’s hope he doesn’t need a hip replacement any time soon.

Benjamin Domenech ([email protected]) is a research fellow at The Heartland Institute and managing editor of Health Care News.