I Don’t Think Therefore IPAB
Posted on March 28, 2012
In the world-view of those who create 7-year plans, the IPAB is a good thing.
Let me explain.
The President’s health care law created a process by which a small group of “experts” would be tasked with finding ways to cut the funding of the Medicare program if and when the program exceeds its spending allotment.
Independent Payment Advisory Board, or IPAB, as it is more popularly known, is a 15 member panel whose charge under Obamacare is to find a half a trillion dollars worth of savings in the Medicare program (to pay for the other parts of Obamacare).
IPAB has been memorably labeled a “death” panel by opponents, although that description might stretch the truth a bit. It is unlikely that the folks selected to serve on such a panel would actually advocate policies that kill people.
But Obamacare has given the IPAB too much power and too little accountability, and a mission that will likely lead to direct health care rationing and a diminishment of health care services.
IPAB is only barely accountable to lawmakers. Indeed, it would require two-thirds of the House and two-thirds of the Senate to veto the decisions of this board. That insures that the IPAB will make decisions with an eye towards the Congress, and given the partisan breakdown of the legislative branch, will inspire it to make decisions with an eye to the political games on Capitol Hill.
The IPAB will have enormous power though. Health care consumes one-seventh of the national economy, and Medicare in many ways dictates how much of that money is spent. But with that enormous power comes a very small group of actual decision-makers.
Like the Soviet Politburo that vainly tried to plan the economy with only a few bureaucrats, the IPAB will vainly try to plan health care spending with 15 lonely bureaucrats. A good size hospital has more than 15 people in its planning department. How can only 15 people decide the fate of our Medicare system?
Doctors and nurses will likely find that the capricious nature of IPAB will make Medicare a risky market to serve. And they will likely leave that market to do something else, making it harder for seniors to get the quality care that they want and need.
In 2003, Congressional Republicans passed and President Bush signed the Medicare Modernization Act, which added a prescription drug benefit to Medicare. Instead of centralizing power in a bureaucracy, the MMA dispersed power in the marketplace, giving senior citizens more choices to pick the kind of prescription drug coverage that they wanted.
Guess what happened? The marketplace worked, the MMA has been a tremendous success, senior citizens are happy with Medicare Part D, and costs have been controlled through competition. Senior citizens have kept the providers accountable, and as a result, the program has worked well.
When will we learn that the 7-year plans promoted by the Soviet Politburo never worked? When we will learn that the marketplace does work to promote both greater quality and greater access to life-saving care?
The IPAB is a bad idea, and when the House of Representatives voted to kill it last week, it did the right thing. Let's hope that the Supreme Court follows suit and throws the whole thing out.