NCPA - National Center for Policy Analysis

The Independent Payment Advisory Board and Access to Health Care

November 8, 2012

The Affordable Care Act (ACA) creates a controversial panel called the Independent Payment Advisory Board (IPAB), which is in charge of cutting Medicare spending. However, there are several problems with it, says Douglas Holtz-Eakin, president of the American Action Forum.

  • First, IPAB's mandate is too narrow and reductions are going to come from programs that represent less than half of overall spending in Medicare.
  • Second, IPAB is unaccountable.
  • Finally, the timeframe for cuts is too short. Cuts have to be achieved in one year, which rules out long-term quality improvements.

Furthermore, IPAB reimburses cuts in Medicare, which has two negative effects on Medicare and overall health care in the United States.

First, it would stifle medical innovation in many sectors related to health because IPAB determines what treatments get coverage and which ones don't. Moreover, the taxes on the industry would force companies to reallocate funding from research and development.

Second, providers will treat fewer patients or impose higher costs on other patients if reimbursements are reduced. Because IPAB creates uncertainty with regard to the payments that doctors receive, many primary care physicians are already opting out of Medicaid at an alarming rate. In effect, IPAB seeks to ration Medicare and make it more difficult to make appointments with doctors.

Source: Douglas Holtz-Eakin, "The Independent Payment Advisory Board and Access to Health Care," American Action Forum, October 2012.


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