Obamacare's Rationing by Another Name

How the Independent Payment Advisory Board gives sweeping powers to an unelected and unconstitutional board of bureaucrats.


The stunning post-debate reversal in Mitt Romney's fortunes may not last through the elections. But win or lose,

he'll do the country a big favor if he continues to expose the Independent Payment Advisory Board—the beloved center-piece of Obamacare—for what it is: An effort to give an unelected and unconstitutional board of bureaucrats sweeping powers to determine whether grandma gets her bypass surgery from Medicare, or a boot off the cliff.

Liberal fact-checkers have been working overtime to discredit Romney's claim that this board will "ultimately tell patients what treatments they can receive." PolitiFact, one self-appointed guardian of truth, rated Romney's statement as "mostly false." The board, it insisted, "can't deny treatment" or "ration care" or "make health care decisions for individual Americans." Rather it can only determine what doctors and hospitals are paid. Likewise, The Los Angeles Times maintained that the board could merely "recommend ways to reduce Medicare spending"—not cut benefits.

But the whole point of the board is to use price controls to discourage expensive treatments. Yes, it is possible that some good doctor will be willing to perform bypass surgeries for Medicare patients even when the board only allows, say, payment for aspirin. It's also very unlikely. If the board decides to set payment for state-of-the-art dialysis at below cost, reasoning that the benefits of the procedure aren't commensurate with the added expense, it isn't rationing care directly. But it is indeed rationing care, because this would effectively consign patients to older treatments.

Before the recession, Medicare spending had been growing 2.6 percentage points faster than GDP. The program already pays out roughly $290 billion more in benefits than it receives in taxes, and it constitutes somewhere between $38.6 to $90 trillion in unfunded liabilities for the federal government.

The main reason for the government's out-of-control Medicare spending is that Uncle Sam picks up most of the tab for seniors' health care, giving them little incentive to curb consumption or shop for better prices. Instead of restoring this incentive, Congress has historically tried to curb spending by cutting reimbursement rates for providers. But this has repeatedly failed because providers are politically powerful. Every time automatic cuts have loomed, Congress has undone them by passing the so-called "doc fix." But instead of solving this problem by exposing doctors to market accountability, Obamacare tries to solve it by shielding the IPAB bureaucracy from political accountability.

Here is how it would work: When ever Medicare inflation threatens to exceed GDP growth plus 0.5 percent—by historical standards, that's probably every year there isn't a recession—the 15-member board would develop a "detailed and specific" "legislative proposal" laying out which treatments Medicare would cover and at what rate. President Obama describes this as "institutionalizing best practices." In plain English, it means determining whose ox gets gored.

What distinguishes the IPAB from the Environmental Protection Agency or the Federal Drug Administration is that those agencies give affected parties opportunities to weigh in before issuing their rules. This board would not be required to offer any avenue for patients and providers to air their concerns, nor could its decisions be challenged in court. Coaxing coverage out of heartless private insurers will seem like a piece of cake compared to confronting this all-powerful bureaucracy, which allows neither access nor appeal.

The IPAB's proposals would automatically become law unless Congress came up with its own equivalent spending cuts—or both houses, including a three-fifths majority in the Senate, waived it and the president signed the waiver. This is an exceedingly high hurdle that would effectively turn the IPAB into a super legislature.

But the most troubling thing about the board is this: Under the constitution, the legislative power—the supreme power—is lodged in Congress along with a democratic check. Courts avoid the democratic check but forego legislative powers. But no government entity, not even the Federal Reserve, gets unchecked legislative powers. This is what the IPAB will have, contravening the core of the Constitution's scheme of checks and balances.

Medicare spending is a pressing problem, no doubt. But the IPAB is a cure worse than the disease. It thwarts seniors' treatment options, providers' independence, and the constitutional balance of powers. The more Romney makes it an issue during his campaign, the more likely that the IPAB itself will be thwarted, whether he ends up in White House or not.

This column originally appeared in the Washington Examiner.