President Obama’s Medical Board: A Backdoor Path to Health Rationing – Pacific Research Institute

President Obama’s Medical Board: A Backdoor Path to Health Rationing

Last week, a House of Representatives subpanel overwhelmingly approved a measure to repeal a key component of President Obama’s 2010 health reform bill.

By a bipartisan 17-5 margin, the Energy and Commerce Committee’s Health Subcommittee agreed to get rid of Sections 3403 and 10320 of the Patient Protection and Affordable Care Act, which celebrates its second anniversary on March 23. Those provisions established the Independent Payment Advisory Board (IPAB) — a new federal agency charged by Obamacare with bringing down costs in Medicare starting in 2014.

The full House and Senate must ratify the subcommittee’s vote and scrap the Board from the books. If they don’t, America’s seniors could face the prospect of government-rationed health care.

The repeal measure is expected to reach the House floor the week of March 19. Sen. John Cornyn (R-Texas) has introduced companion legislation in the upper chamber, but Majority Leader Harry Reid (D-Nev.) has not yet placed it on the schedule.

There’s support for repeal of IPAB in both houses of Congress. Republicans uniformly favor scrapping the panel. And on the Health Subcommittee, two Democrats voted with the majority. One of them, ranking member Rep. Frank Pallone (D-N.J.), has said he “would certainly be in favor of abolishing” IPAB. Seventeen House Democrats have co-sponsored the repeal legislation.

IPAB will consist of 15 members appointed by the president and confirmed by the Senate. Each member can serve up to two consecutive six-year terms. If the Centers for Medicare and Medicaid Services determine that Medicare spending will exceed a preset growth target, then IPAB is empowered to make cost-cutting recommendations.

The Obama Administration’s newly released 2013 budget proposal actually ratchets down the target growth rate — which means that IPAB will more than likely be called upon to start slashing.

There are some limits on what IPAB can propose. The panel is not allowed to make any changes to Medicare’s fee-for-service structure or to adjust the level of benefits that seniors receive.

The Board is empowered to try some “innovative” approaches to modernizing the program. But these approaches have all been described by the Congressional Budget Office (CBO) as achieving only marginal cost savings.

Realistically, the Board has only one legitimate cost-cutting tool that can get Medicare under the targets — lowering reimbursement rates for participating doctors, nurses, and hospitals. And since IPAB has to reduce overall Medicare expenditures by focusing on just this one area, these cuts will likely be very deep.

Now, according to the CBO, Medicare will cost $1 trillion and be bankrupt by 2022. There’s a roughly $280-billion gap between the premiums and taxes coming into the system and the benefits flowing out. About 10,000 new seniors sign up for the program every day. Without substantial reform, Medicare is going to go bankrupt — and take the rest of the government with it.

But IPAB is a remedy that’s worse than the disease. Reimbursements in Medicare are already dangerously low — less than 65 percent of the private market rate on average, according to one estimate. As a result, many doctors and other caregivers simply refuse to treat new program enrollees — or opt out of Medicare entirely. That leaves seniors without someone to care for them. They have to suffer longer wait times, and their conditions deteriorate.

The Affordable Care Act has already installed hundreds of billions of dollars in Medicare payment cuts. According to Medicare’s own actuary, just these cuts alone will make it “unprofitable” for many healthcare providers to treat enrollees. By further slashing rates, IPAB would make this situation worse.

What’s more, there are effectively zero checks on the Board’s powers. IPAB has to submit its recommendations to the Department of Health and Human Services, which then presents them to Congress. These recommendations would automatically go into effect unless legislators either completely vetoed them via supermajorities in both Chambers or passed alternative legislation that achieved the same level of cost savings.

Both outcomes would be near impossibilities. And to make matters worse, Congress would have to consider them on a “fast track,” which would give lawmakers just one month to act. After that, IPAB’s dictates would take effect. In the end, a small group of unelected, unaccountable bureaucrats would have unchecked power over the health care of 45 million seniors — and with the coming retirement of the Baby Boom generation, even more than that.

Last week’s initial vote to scrap IPAB was a good start. But several legislative hurdles remain. If this board isn’t erased from our nation’s laws, then a healthcare nightmare could soon dawn for America’s seniors.


Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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