Bipartisan Rejection of Obamacare’s IPAB Rationing Board Grows

Kathryn Nix / July 21, 2011

This week, the House Budget Committee and Energy and Commerce Committee held hearings to examine the Independent Payment Advisory Board (IPAB), a board of unelected bureaucrats tasked under Obamacare to reduce the growth in Medicare spending.

During the Budget Committee hearing, Grace-Marie Turner, president of the Galen Institute, described the board:

[T]he IPAB is unprecedented in the power given to unelected officials to direct hundreds of billions of dollars in federal spending. The IPAB will give unelected, unaccountable government appointees the power to make decisions about payment policy in Medicare that will ultimately determine whether millions of seniors have access to the care they need. This challenges the very principles of representative democracy and consent of the governed.

Understandably, the board’s overreach has lawmakers on both sides of the aisle concerned. In his testimony, Senator John Cornyn (R–TX) said he was “concerned that IPAB’s enormous power will grow at the expense of Congress and the people’s elected representatives.” Representative Frank Pallone, Jr. (D–NJ), described IPAB as a sign of a “growing imperialistic presidency.” Representative Allyson Schwartz (D–PA) struck at the heart of the issue, saying, “[W]e cannot conceal fundamental flaws in our health care system by simply cutting reimbursements to hospitals and physicians.”

Therein lies the problem. Since the board is restricted in the methods it can pursue to reduce costs, its main tool will be to cut provider reimbursement rates. Payment rates that do not accurately reflect the true costs of providing health services can serve as a dramatic barrier to care, as Medicare’s chief actuary explained before the Budget Committee in the highlighted video. Deep cuts are already included in current law, and if an unelected board cuts even further, the effects will be profound.

To imagine the result isn’t difficult. As Turner said:

If the spending reductions in the law today were to take place, seniors could face long waits for appointments and treatments, and many would be forced to wait in line in over-crowded emergency rooms to get care, just as Medicaid patients do throughout the country today.

Medicaid pays doctors only 58 cents for every dollar paid by private insurance, and in many parts of the country, providers actually lose money to see Medicaid patients. If cuts in current law go into effect, Medicare will pay doctors 57 percent of what private insurers pay in 2012, dropping below Medicaid. Moreover, the actuary warns that Obamacare’s cuts to hospital payments could cause 30 percent of providers of inpatient services to become unprofitable.

With reductions like these already written into law, IPAB’s effects would be disastrous. As a result, repeal efforts are already underway in the House of Representatives. But while bipartisan support builds against IPAB, some on the left would have the board go even further. Judith Feder of the Center for American Progress told the Budget Committee: “Congress should…modify IPAB’s current spending target to apply not just to Medicare but to private insurance. Indeed, to all health care spending, and extend its authorities to trigger recommendations for all payer payment reform if the target is breached.”

Medicare’s $37 trillion in unfunded promises—and runaway spending in the health care sector at large—must be addressed, but not by a government body that can do so only by restricting access to health care. Instead, lower costs and higher quality of care can be achieved by introducing competition and consumer choice through the reforms included in Heritage’s Saving the American Dream plan.

This post was co-authored by Kyle Rusciano, a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm