Super Committee Should Do Away With Rationing Board

Published September 21, 2011

Given that the new Congressional super committee is charged with cutting federal spending, the 12 lawmakers on the panel will have no choice but to recommend changes in Medicare. They should start by repealing the harmful and misguided rationing board created in President Obama’s health care law.

The Independent Payment Advisory Board (IPAB) was created to take difficult decisions about cutting Medicare spending out of the legislative process. In so doing, it gives unprecedented authority to a panel of unelected technocrats to make payment policy involving hundreds of billions of dollars and impacting tens of millions of seniors.

The board’s decisions inevitably will force physicians to be accountable to the bureaucracy rather than to patients and distort their decisions about providing whatever medical care is in the best interest of their patients. The IPAB is to be composed of 15 experts confirmed by the Senate, who will have the authority to make cuts in Medicare payments, starting in 2014, if per capita spending exceeds targeted rates.

The power is unprecedented because there will be no judicial, administrative, or, realistically, congressional review over the board’s decisions.

Congress Has Little Recourse

The law sets timelines that are so unrealistic, and vote thresholds so high, that it would be difficult if not impossible for Congress to override the board’s recommendations. And if Congress does not approve, modify, or reject the recommendations in the required timeframe, the cuts automatically go into effect, giving the IPAB’s decisions the force of law.

The unelected board’s decisions ultimately will determine whether millions of seniors have access to the care they need. IPAB has the power to ratchet down payments, which would limit patients’ access to physicians, medicines, and other treatments. It creates an additional hurdle for companies creating new drugs and medical devices, and this threat inevitably will stunt innovation and development of new and better medical technologies.

A Blunt Instrument

The IPAB is a blunt instrument that does not have the tools to address the real drivers of Medicare spending growth, primarily an outmoded payment model that rewards inefficiency and waste. 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 It is barred from making changes that would modernize the program’s outdated fee-for-service structure or change beneficiary incentives.

While the law says the IPAB can try innovative approaches to modernize care, the Congressional Budget Office is unlikely to score these programs as achieving any meaningful cost savings. Because the IPAB will be required to make changes that demonstrate actual savings in a one-year timeframe, the only tool the board will realistically have will be to cut Medicare payment rates for those providing services to beneficiaries.

And the IPAB is even limited in the kind of spending it can cut. Between 2014 and 2020, the health law directs the IPAB to achieve its targets through payment reductions primarily in Medicare Advantage, the Part D prescription drug program, 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 will have to be very deep to achieve overall per capita spending reductions.

Opposition Is Bipartisan

Opposition to the IPAB crosses party lines. Rep. Frank Pallone (D-NJ), the top Democrat on the Energy and Commerce Health Subcommittee, said recently he has no interest in defending the board and in fact favors abolishing it. The more people learn about the IPAB, the more they want to see it repealed and replaced with better solutions.

Spending on Medicare and other entitlement programs must be contained. The question is whether it will be through IPAB and the rationing built into the president’s health care law, or through a market-based solution that uses competition to reduce costs. The president takes a top-down approach that puts a small number of independent experts in charge of decisions that will impact tens of millions of seniors and progressively limit their access to care.

IPAB is the wrong approach. Do we trust doctors and patients with decisions about their own care, with new incentives to be partners in managing their health spending? Or do we entrust those decisions to a government-appointed panel of experts in Washington?

It is a clear choice.