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But what about nuclear-strength Medicare reform? Regardless of whether the rest of the law comes down, IPAB's built-in protections may be strong enough to prevent other types of reform to the seniors’ health program.
Barring a supermajority vote in the Senate, the only way Congress can override IPAB’s recommendations is to provide similar-sized cuts in a prescribed form and in a limited time frame. The way the law is written, Cohen says, “Congress is prohibited from offering an alternative if it doesn’t meet the requirements of the statute.” It gives IPAB a directive on what it must do, but limits Congressional options.
That could mean that other types of reforms—like a voucher system or the premium-support plan included in GOP Rep. Paul Ryan’s budget plan—might not make the cut. “You can’t do anything different that might actually be real reform,” says Cohen. “It definitely is a reform killer.”
So even as skepticism abounds that IPAB will fail to restrain Medicare spending, it may put the kibosh on other mechanisms designed to rein in the program’s growth.
IPAB isn’t Congress’s first attempt to reduce large-scale deficits through an independent spending-restraint mechanism. In 1985, Congress faced a budget crisis and a mounting debt. In response, it passed the Balanced Budget and Emergency Deficit Control Act of 1985, which came to be known as Gramm-Rudman-Hollings (GRH), after Sens. Philip Gramm (R-Texas), Warren Rudman (R-N.H.), and Ernest Holling (D-S.C.), the three primary authors. Like IPAB, the law used a trigger system, setting target figures for deficit reduction. If Congress failed to meet its deficit targets, then an automatic process known as sequestration—blind, across-the-board spending reductions—was supposed to occur.
But as soon as the law passed, it was challenged in court. And in the summer of 1986, Gramm-Rudman-Hollings’s sequestration mechanism was ruled unconstitutional. GRH granted budget authority to the Comptroller General, an officer of Congress, who was found to have been illegally granted executive powers.
In 1987, Congress revisited the law, passing an updated version designed to avoid legal challenge. It didn’t violate the Constitution, but it didn’t work very well either. In 1986, the law’s deficit target was $172 billion. The actual deficit was slightly over $221 billion. In 1987, the deficit came within a horse shoe’s distance of hitting its $144 billion deficit target, clocking in at $149.8 billion. But by 1988, the gap had widened once again: The initial target was set at $108 billion, but the actual deficit hit $155 billion.
The program wasn’t just a failure. It may also have encouraged gimmicky budgeting. According to Robert Lee, Philip Joyce, and Ronald Johnson’s primer on public budgeting systems, not only did the 1980s finish without Gramm-Rudman-Hollings having “appreciably affected the overall budget deficit situation,” its rules resulted in both the president and Congress attempting to meet the prescribed deficit targets by basing their budget plans on “unrealistically optimistic economic assumptions.”
One danger to IPAB then, is that it will work through means of dubious constitutionality. 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. When Gramm-Rudman-Hollings passed, Sen. Rudman reportedly called it a “bad idea whose time has come.” If Goldwater’s challenge is successful, IPAB may be a big idea whose days are numbered.
Peter Suderman is an associate editor at Reason magazine.