Policy

Congress Already Working To Dismantle ObamaCare's Medicare Cost-Control Board

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For years, Congress has failed to control the rising cost of Medicare. In 1998, legislators tied the program's physician reimbursement rates to a formula known as the sustainable growth rate (SGR). But as soon as formula called for reimbursement cuts, Congress passed an override and has continued to do so every year since on a more or less bipartisan basis. It wasn't the mechanism that failed. It was Congress.

ObamaCare's authors decided to give Medicare spending containment another go. They created the Independent Payment Advisory Board (IPAB), a 15-member panel of health bureaucrats charged with keeping total Medicare spending at or below certain targets. The idea was to take Medicare's cost-control decisions out of the hands of politicians who have proven unwilling to make cuts.

Darth Vader not yet nominated to IPAB.

Here's the problem: Ultimately, as with SGR, Congress still has control of IPAB—its existence and the details of its authority and operations. As former Congressional Budget Office director Doug Holtz-Eakin told me months before the health care overhaul passed, there's no reason to believe that Congress will behave any differently this time around: "The surrendered their budget authority to a formula [SGR], but they took it right back."

And sure enough, even IPAB is still years away from being operation, it looks like legislators from both parties in the House are already working to take back the spending power they gave away. From Politico:

One of the key provisions in President Barack Obama's health care reform law — his preferred method for getting Medicare costs under control — is facing a groundswell of opposition from unexpected corners.

Several House Democrats have signed on to support a bill to repeal the Independent Payment Advisory Board, a panel created by the law that is supposed to help control rising costs in Medicare. The National Committee to Preserve Social Security and Medicare, a prominent supporter of the law, is now actively lobbying for its repeal, too.

The opposition puts some Democrats and a prominent advocacy group on the same side as House Budget Chairman Paul Ryan (R-Wis.) standing against Obama. Ryan has called IPAB a rationing board. The president, for his part, answered Ryan's budget by proposing an even stronger version of the board than the health reform law created.

For more than a year, the National Committee and other supporters of the reform law who didn't like the IPAB were willing to put up with it for the greater good of the law. But in recent weeks, that support has waned.

I have argued in the past that within the less-than-ideal confines of a single-payer system like Medicare, bureaucratic cost-control, however problematic it may be, is probably preferable to no cost control at all. But the problem with the bureaucratic approach is that it relies on an awful lot of willpower from politicians: The bureaucrats can't do much if Congress won't let them.

Naturally, Obama's debt-reduction proposal relies on expanding IPAB's power and toughening its cost-reduction targets. Good luck with that!