NCPA - National Center for Policy Analysis

The Road to IPAB

March 26, 2012

The massive 2010 health care law will go before the U.S. Supreme Court soon and a number of its provisions will come under attack.  Yet while so much attention has been paid to the individual mandate and expansions of Medicaid, the Independent Payment Advisory Board (IPAB), has flown largely under the radar, says Devon Herrick, a senior fellow with the National Center for Policy Analysis.

The IPAB is a 15-person board of unelected bureaucrats who are charged with controlling the rate of growth of Medicare spending.  While this may seem to be an admirable goal, given the unsustainable increase in spending on the program, the guidelines that govern the IPAB make it worrisome.

  • The recommendations of the board aren't merely proposals -- they can automatically become law.
  • Peter Orszag, former director of the Office of Management and Budget, recently made clear that these laws can be overturned by Congress, but that such a move would require a repeal to follow the standard route of a law, including approval by President Obama.
  • Thus, the process of creating laws has essentially been reversed, with unilateral actions being taken by third parties that a gridlocked Congress cannot effectively check.

The implementation of the IPAB creates a dangerous precedent in this regard, as it cedes away a great deal of legislating authority.

Furthermore, the likely avenues of action for the board will probably prove damaging in the IPAB's attempt to control spending.

  • While the law expressly prohibits the board from rationing care, it allows changes to provider fees that will have the same effect.
  • Yet providers have demonstrated their aversion to below-market compensation by increasingly moving away from accepting Medicare.
  • Therefore, IPAB's attempt to lower rates to providers will drive more health care professionals out of the Medicare sphere and leave Medicare enrollees in a lurch to find care.
  • Additionally, with some 78 million baby boomers set to retire over the next few decades, stress on the Medicare system as a whole will also increase rapidly.

Source: Devon Herrick, "The Road to IPAB,", March 21, 2012.

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