IPAB: “The Roach After the Nuclear Blast.”

ObamaCare’s Medicare cost-control panel may be unworkable, unconstitutional, and a barrier to real reform. It’s also very difficult to repeal.

A small army of health policy wonks helped Democrats pack ObamaCare full of big ideas that they hoped would transform American health care, making it less expensive and more effective. Perhaps the biggest of those ideas is IPAB, the Independent Payment Advisory Board, a 15-member panel of bureaucrats appointed by the president and tasked with holding total Medicare spending to predetermined spending targets. The panel’s name suggests it’s merely an advisor to Congress, which has traditionally been in charge of Medicare spending, but its “recommendations” have the force of law unless Congress holds down spending enough to meet the target or eliminates the board, which it can only do with a supermajority vote in the Senate.

Rather than serve in an advisory capacity, IPAB is really designed to take over Congress’s job. Indeed, that’s the primary point. Over the years, Congress has repeatedly failed to hold Medicare spending in check—the program is speed walking towards insolvency in 2024—overriding scheduled payment reductions again and again under political pressure. IPAB is intended to take tough decisions about Medicare spending out of the purview of politically motivated legislators and turn those decisions over to a board of independent, unelected bureaucratic experts. Health wonks, in other words, convinced Congress to put a panel of health wonks in charge of the nation’s biggest health insurance program.  

In a major speech on the federal debt earlier this year, President Barack Obama took this big idea and proposed to make it bigger by tightening IPAB’s official spending targets. Spending control and reduced political liability for Medicare cuts—what’s not to like?

Plenty. Aside from the individual mandate, IPAB is arguably the law’s most controversial provision, and it faces a host of hurdles. To name a few: It may not work. It might be unconstitutional. And it could block other reforms.

Obama may have invested a lot in IPAB, but many of his fellow Democrats aren’t enthusiastic. New Jersey Rep. Frank Pallone, a Democrat on the Energy and Commerce health care subcommittee, told Politico earlier this week that “I’ve never supported it, and I would certainly be in favor of abolishing it.” Rep. Allyson Schwartz (D-PA) recently sent her fellow Democratic representatives a letter imploring them to repeal the law entirely.

The government’s own top budgeting officials, meanwhile, have expressed skepticism that the law will successfully restrain Medicare’s spending growth. In 2009, Congressional Budget Office director Douglas Elmendorf told Congress that "in CBO's judgment, the probability is high that no savings would be realized...but there is also a chance that substantial savings might be realized.” Medicare’s chief actuary has warned that it may be difficult to achieve the efficiency gains the panel hopes to exploit. 

Meanwhile, just like the mandate, there’s a brewing constitutional challenge. The Goldwater Institute, an Arizona-based think tank, has filed a lawsuit against the board, arguing that that Congress cannot delegate its responsibilities away to an unelected, executively appointed board.

Diane Cohen, Goldwater’s lead attorney on the case, tells me that “the creation of the board violates the separation of powers doctrine. Congress cannot delegate away its legislative responsibilities under the Constitution.”

Congress does have the power to create independent agencies that make rules and regulations. But those agencies and their authority are required to be based on what’s known as an “intelligible principle.” If Congress is going to create an independent body to do its work, it needs clear marching orders rather than a vague directive.

“It can’t just be a self-starting thing that sets policy,” explains Ilya Shapiro, a Senior Fellow in Constitutional Studies at the Cato Institute. “With IPAB, all Congress says is do your thing and control spending.” Still, both Cohen and Shapiro admit that courts have interpreted the intelligible principle standard loosely, deferring to Congress in every delegation of powers case in the last 70 years.

But according to Cohen, IPAB’s mandate is so broad, and the checks on it so few, that it tests the limit of even the most deferential standard. “It’s like the perfect storm of bad elements,” she says. Among the problems? “Overly broad delegating authority language, no judicial review, no administrative review, no rule-making. There’s no meaningful congressional oversight and it’s not repealable except for under the most draconian and limited circumstance.”

That’s the other catch: ObamaCare doesn’t just create IPAB. It also sets in place a series of barriers designed to make it extremely difficult to repeal. So if Congress wants to get rid of IPAB, it will have to jump through a complex set of hoops first.

That means acting swiftly and with great unity. The health care overhaul contains a provision labeled Joint Resolution Requirements to Dissolve the Board that lays out exactly the steps that Congress must follow if it wants to take down IPAB. The provision lays out in great detail what a joint resolution to dissolve IPAB would have to look like, and then sets out a further requirement that it must be introduced between January 1 and February 1, 2017—meaning Congress would have to act in just a few working days. 

Following the introduction of the legislation, Congress would have to pass the joint resolution with a supermajority of sworn members by August 15 of the same year. “If you don’t do that,” Cohen says, “Congress has no option, at all, to repeal the board.” Meanwhile, even if the board were successfully dissolved, IPAB would keep issuing its recommendations, which would still have the force of law, until 2020.

The protections erected around IPAB make it all but impossible to repeal. “We kind of joke about that,” says Cohen, “the idea that the whole bill comes down but the only thing that stays is IPAB, like the roach after the nuclear blast.”

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Tim||

    "Rise Lord Vader"

  • sarcasmic||

    white coat == doctor

  • ­­­­­­­||

    But what about the ponytail?

  • sarcasmic||

    That just means he's a Democrat.

  • J.R.||

    Minority doctor, woman doctor, homosexual doctor. Photo-op 101.

  • B.P.||

    Sixties leftover. Good optics on this one, White House.

  • ||

    They're not doctors, they're physicists.

    You don't want to know.

  • T||

    Pharmacist, which is almost the same thing.

  • RADIOACTIVE||

    "It may not work. It might be unconstitutional. And it could block other reforms."...mere quibbles

  • sevo||

    Tony:
    Just needs some tweaks.

  • ||

    I don't know, this article doesn't do a very good job of explaining why IPAB is such a bad idea. Don't get me wrong, I think it probably is, but this article doesn't exactly explain why. MOst of the complaints in the article seem to be about the process and not really the substance of what IPAB is trying to accomplish.

  • Otto||

    IPAB, the Independent Payment Advisory Board, a 15-member panel of bureaucrats appointed by the president and tasked with holding total Medicare spending to predetermined spending targets.

    Because they're no way that the distributed intelligence of the market could be as smart as 15 bureaucrats.

  • Dick Fitzwell||

    That's how you get health care spending down to 10% of the budget. It's not that it costs less, they just pay for less care.

  • ||

    Easy fix is jack taxes to 80% of GDP so like 10% of 15 trillion is...wow, $1.5 trillion. Its easy!

  • Jordan||

    There are still idiots who believe in central planning.

  • Tony||

    her de der her de der her de der her de der

  • ||

    Isn't that an old Pol Pot quote when the right said he would be much worse than the alternative?

  • ||

    It's only one step down from Soviet-style economic planning. The only difference being who owns the service providers. That's literally the only difference. The level of manipulation and control over the industry that our government wields is about the same.

  • Chris||

    Yeah because the previous system was working so well at containing costs.

  • Number 2||

    In related news, the AP reports that Obama is raising campaign funds at a "blistering" rate.

    This is the same Obama who, eight days ago, said that he "was not thinking" about re-election.

    And still he is not called on this by the mainstream media...

  • ||

    But another danger is that it just won’t work at all—leaving the country with the burden of rising Medicare spending and perhaps even more limited means by which to reform it.

    At which point the "only" solution will be tax hikes, right?

  • ||

    That’s the other catch: ObamaCare doesn’t just create IPAB. It also sets in place a series of barriers designed to make it extremely difficult to repeal.

    Utter horseshit. If Congress passes a law repealing it, and the President signs it, its gone. Whether any of the crap in the ObamaCare bill intended to protect is complied with is utterly irrelevant.

  • Spaceman||

    This is correct. Congress can't pass a law they cannot repeal. It's like that old God paradox, "Can He microwave a burrito so hot even He can't eat it?"

    Well, Congress can't pass a law so draconian even they can't repeal it.

  • Eduard van Haalen||

    From the article:

    “New Jersey Rep. Frank Pallone, a Democrat on the Energy and Commerce health care subcommittee, told Politico earlier this week that 'I’ve never supported it, and I would certainly be in favor of abolishing it.'”

    Never supported it? Does that mean he voted against the health-care reform bill?

  • Frank Pallone||

    You don't think I actually read that whole thing, do you?

  • filbert||

    Why does Obama think that the IPAB a good idea, but the debt limit is a bad idea?

    Aren't they pretty much the same thing?

  • EscapedWestOfTheBigMuddy||

    One stops him from giving my money to other people (or vice versa if it comes to that) while the other helps him to do so and lets him take the credit.

  • ||

    Unbelievable. This panel was one of the few chances to cut Medicare spending (the other is killing the doc fix) and Reason is shitting on it.

    Ryan's plan just piles up debt for 10 years doing nothing.

    So - shitty (R) plan = good and less shitty (D) plan is terrible.

    I get it.

  • some guy||

    Just because IPAB has a chance of working doesn't mean it will work. Doing nothing has a chance of working. Ryan's plan has a chance of working. Also, I'm sure you don't care whether IPAB is an unconstitutional abdication of Congressional responsibility, but I do.

    Also-also, I've yet to see a Reason article that says Ryan's plan is "good". Most of them say it's better than PPACA, but still not good.

    I get it.

  • ||

    Ryan's plan doesn't attempt to cut cost until 2022. Obama's DOES right off the bat with the elimination of Medicare Advantage subsidies. It was attacked for cutting $500 billion.

    I'll take the $500 billion over nothing.

    And an independent board? Serious? The Fed board hasn't been challenged in 98 years.

  • ||

    The Fed board hasn't been challenged in 98 years.

    There's some good historical anecdotes about Lyndon Johnson smacking around - and I mean literally smacking around - Arthur Burns because Great Society + Vietnam + Medicare was cumulatively blowing up Fed budget. And the French didn't want paper anymore, they wanted gold.

  • ||

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  • Doug||

    Squirrel!

  • ||

    The guy with the ponytail looks like tech-support dude Philo at channel U62.

  • ||

    Umm, separation of powers much?

  • ||

    Here is another example of Government getting in the way.

    http://nymag.com/news/features.....ndex1.html

  • ||

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  • sevo||

    "I paid $32.67 for a XBOX 360"
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  • ­­RayanUngoy||

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  • ||

    This is a ridiculous argument. This Congress can not bind the hands of future Congresses in this manner unless those Congresses agree. Congress could, for example, simply pass a repealer bill that eliminated all parts of the US Code referring to IPAB. Poof, its gone as long as the President signs. Alternatively, the Congress could simply prohibit the expenditure of any funds by IPAB by rider within whatever appropriation bill funds the Board. Finally, the appropriations bill could contain language like: "Notwithstanding any finding of IPAB, $XXXXXXX of this appropriation is dedicated to the the funding of [THING IPAB CUT]."

  • Robert Finney PhD||

    MANCHURIAN CANDIDATE MEDICAL CARE
    The IPAB is the American "operator" responsible for conditioning American doctors to control medical necessity decisions about individual patients’ diagnosis and treatment. Doctors’ actions are triggered by IPAB’s “best practices” rationing instructions, which serve as the red Queen of Diamonds playing card. When doctors see it, they will obey all guidelines and orders given to them by the IPAB.
    When the IPAB instructs them to deny diagnosis/treatment to patients with costly diseases, doctors are conditioned to never question their actions, making them the perfect assassins. If doctors refuse to obey, payment is denied and “recaptured.” Conditioning occurs by coercive persuasion that breaks down the psychic integrity of the individual doctor with regard to information processing and individual values. As Nixon’s aide Chuck Coulson said, “Get them by the balls and hearts and minds will follow.”
    Doctors are ordered to play electronic IPAB solitaire in the exam room. When the “best practices” cards show the red Queen of Diamonds, doctors are conditioned not to order tests and treatment…No to mammograms, PSA, knee replacement, cardiac catherization, autism therapy, kidney transplant, etc.
    IPAB is rooted in Kaiser Permanente’s doctor conditioning protocols, which are embedded into the HMO’s electronic medical records system. Kaiser Permanente invented rationing. Kaiser Permanente's "best practices," are based on cost containment, not quality. The doctor-patient relationship has a third person in the exam room - the health plan. Kaiser Permanente’s medical group published an article admitting that this is how they practice medicine.
    Affordable Care Act cheerleaders’ hypnotic chant that the IPAB is the “kindest, bravest, warmest, most wonderful bureaucracy I've ever known in my life" will grind good doctors and patients “into the dirt.”
    Robert Finney PhD
    www.hmohardball.com

  • ||

    Short-term solution: the new Constitutionally Conservative President in January 2013 should:

    Issue waivers to every business, person or entity that asks for one...

    Except those that promoted the progressive policy in the first place. Let SanFran, SEIU etc. pay for it; everyone else is off the hook!

  • ||

    IPAB = Death Panel

  • ||

    Guess Sarah Palin's death panel metaphor wasn't the lie of the year after all.

  • ||

    The people who write these highly detailed articles must believe that We The People are concerned about what laws are passed in Washington and State legislatures. Shoot, those ol' boys can pass laws until the cows come home. Who cares. We'll just wink and take our business to the Black Market. "Hey Doc, I'll give you 3 dozen eggs and piglet if you'll vaccinate my kid against chicken pox." Big Labor Big Government Socialists are barking up the wrong tree.

  • ||

    Since when did congress hamstring itself so that a series of issues had to be repealed first?

    Since when did the Constitution say law could be made this way?

    Since when did one group of Americans come up with ridiculous notion that they could draw up rules making it hard for later generations to go about their life the way they want?

    Answer: They didn't.

    And Reason knows it.

    Why they advocate putting up with it is beyond me.

  • ||

    So it's unconstitutional for Congress to delegate its authority...join the club.

    Congress created the EPA and passed the clean air act. The executive branch ran with this to regulate items not specifically covered under the law (i.e. CO2) and arguably do not impact clean air.

    Hell, the Supreme court even got in on the act giving the EPA their blessing even though the original legislation says nothing about CO2.

    This train has already left the station, my friends.

  • B2||

    I am confused by this article -- and I am a former Congressional staff member -- and would appreciate some elaboration/explanation.

    I fail to see how Congress can establish hoops it has to go through to dissolve a board (requiring that the repeal measure be introduced on a certain date etc etc.) This is ridiculous. What is the mechanism that is supposed to make this enforceable? At any time, Congress can repeal any law it wants, simply by passing a new law by simple majority (barring a filibuster) and presidential signature. I don't see how meaningful barriers to repeal could be erected.

    I think there are necessary pieces of information which are missing from this article. Again, it would be nice if someone at Reason made another stab at this.

  • Brian Dell||

    Meanwhile, the Republican leader in the Senate has proposed that Congress wash its hands of responsibility for raising the debt limit and give over to Obama the power to do so.

    I consider myself a conservative, but I am not an American conservative, and some of you American conservatives are making Obama look good with your inability to do anything but go all-in every hand no matter what you are holding. Obama has proposed the IPAB to cut spending because Congress has failed to do its job with respect to this cutting. And this month Obama has signaled he is OK with a trillion dollars plus in cuts and the Republican Congressional leadership is apparently going to just leave that on the table simply because Obama also wants to reduce the deficit even more than that with tax reforms many economists agree with.

    May I remind people that even the Ryan plan implied that the debt would rise to $20 trillion? And yet the GOP is right to go to the wall this summer to not raise it above $14? The hypocrisy is getting out of hand.

    A true conservative CUTS SPENDING and, if anything, lets taxes RISE because, as any economist will tell you, the quantity supplied increases as the price is lowered, and cutting taxes just gives people a discount sale on government services. You are just stimulating demand. A demand for a tax cut is like a demand to pay less of a down payment, you still have to pay the bill. If anything you should be paying MORE cash (ie taxes) and thereby less on credit if you are true conservatives.

  • Richard Kelly||

    It will not take a supermajority to kill IPAB. No congress can bind a subsequent congress.

  • Jeremy Janson||

    Well:

    1) The courts can probably strike down such a requirement but even if that isn't so....

    2) It can still be repealed by constitutional amendment. Amendments can do just about anything. We probably need a few about now anyways.

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