The Tough Politics of ObamaCare's Cost-Control Board


IPAB—the Independent Payment Advisory Board created by ObamaCare to limit the growth of Medicare spending—was always going to be a tough sell. It's not just that it attempts to enforce a limit on Medicare spending growth. It's that it's explicitly designed to circumvent Congress.

If IPAB works as planned, each year going forward, the 15 member board of health policy bureaucrats and experts will be given a target for the growth of Medicare spending. If annual spending goes over the target, the board members are required to come up with a package of cuts that slices off the excess. Once approved, that package of cuts becomes law automatically unless Congress acts in an expedited manner to block it. The rules say Congress can only block IPAB's recommendations with either an equally large package of cuts or a three-fifths super-majority to override the cuts entirely.

IPAB is limited somewhat in terms of what it can propose: Nothing that explicitly "rations" care, no adjustments to Medicare's benefit system, and no changes to the program's eligibility rules. Which means that it's pretty much left to technocratic payment tweaks: Pay more to one group of providers and less to some other group, or create payment incentives and disincentives designed to shift provider behaviors.

There's a case to be made for this approach, given that Congress has historically been unwilling to make changes to Medicare that keep its costs down. But there's also a real risk that it won't work. Because even though IPAB is designed to route around Congress, it can't—not entirely anyway.

For one thing, if an administration signed on, Congress could always pass legislation to repeal IPAB, just as Congress and the president passed legislation to create. This is not as far-fetched as it might sound.  House Republicans already voted last year to repeal the board entirely. But it wasn't a strictly GOP effort. About 20 Democrats supported the basic idea, and only backed off when Republicans decided to combine IPAB repeal legislation with a malpractice reform plan that caps trial lawyer awards. In other words, the seed of opposition already exists within the Democratic party. And that seed may grow larger once Democratic politicians see what sort of cuts and tweaks IPAB cooks up—and which constituents are affected by them.

Still, repeal isn't likely. However, it's also not strictly necessary. Congress doesn't need to get rid of IPAB to avoid seeing the board's recommendations become law.

It can simply override those recommendations every year. The override process—which the Cato Institute's Michael Cannon details here—is complex enough, and requires a large enough consensus, that it will take a serious effort. But the yearly doc-fix dramas we've watched for the past decade have shown that Congress can act in a broadly bipartisan manner before a deadline each year to override scheduled cuts to Medicare payments, especially when there's a influential and demanding interest group loudly insisting that those cuts will harm beneficiaries.

And in the meantime, simmering political controversy over the board will lead to tactics like this, the latest gambit by House Republicans to resist the board. Via The Hill:

House Republicans signaled Thursday they will not follow rules in President Obama's healthcare law that were designed to speed Medicare cuts through Congress.

The House is set to vote Thursday afternoon on rules for the 113th Congress. The rules package says the House won't comply with fast-track procedures for the Independent Payment Advisory Board (IPAB) — a controversial cost-cutting board Republicans have long resisted.

The rules package signals that Republicans might not bring up Medicare cuts recommended by the IPAB — blocking part of a politically controversial law, and resisting Medicare spending cuts.

The rules could be challenged in court, because they seek to override a law that Congress passed, but unless that happens, the House can likely abide by the rules it adopts Thursday.

Another interesting wrinkle is the composition of the board itself. President Obama has yet to make any appointments, and anyone he does appoint is sure to face resistance from members of Congress. That the president has so far declined to begin any public work on the appointments process suggests how politically fraught the subject is. On the other hand, it may be that the Obama administration just wants to evade that fight entirely. And if he appoints no one, it may be that he can skip straight to the technocratic tweaks: According to Cannon and the Goldwater Institute's Diane Cohen, should President Obama not appoint any board members, IPAB's powers would end up in the hands of the Health and Human Services Secretary, Kathleen Sebelius.