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.

NEXT: Steven Greenhut on Protecting Freedom from Overreaching Government

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  1. …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.

    It’s almost as if they planned this all along. Can’t wait to see the Democrats’ responses to a Republican appointed HHS Sec wielding these powers. It will happen eventually…

  2. We need to seriously ration care for the elderly. The only politically feasible way to accommodate rationing is by moving to vouchers to let the private sector do it.

    1. socialized medicine, by definition, rations care. Even those systems understand that money is finite and saying ‘no’ is a necessity. That is going to come as a huge shock to many here.

      1. Problem is that the R’s are more terrified of rationing care than the D’s. Why do you think Bush passed the prescription drug benefit?

        Both sides want to get the votes of the elderly, but the R’s have to BUY those votes with more free shit, more often, because nobody believes they’re actually serious about protecting entitlements.

        They’re like the estranged Dad who shows up at Christmas with insanely expensive gifts to prove to his children that he really loves them.

        Meanwhile the D’s love handing out free shit, but they also love price controls and rationing and always have. They want to give people stuff, but they don’t want to actually pay for it. They want to expropriate it by force. So they have no problem imposing price controls and mandates to force people to hand over the free shit.

        See Mom just knocks over a convenience store to buy you that Playstation. Dad’s the sucker who actually pays for it with money from his wallet.

        1. The part about the Republicans I never thought of before, thanks, interesting. The part about the Democrats, yeah, that I already knew.

    2. Well I would like to say that we can try to maximize Medicare Benefits with help of financial advisor rather than relying on decisions of government.

    3. I would like to say that elders genuinely need Medicare Benefits, many elders don’t get good money to pay medical bills so it has to be done on priority and properly.

  3. Yes, this sounds like a simple, efficient, and nonbureaucratic way to make medical decisions for people.

    1. What you did there…..

      I see it.

  4. “President Obama has yet to make any appointments”

    Odd that. Normally he and his people are quite timely and decisive in their appointments, reporting and such!

    Oh, and litigation over a past Congress binding a future Congress on its own rules would be interesting to see.

  5. “It’s that it’s explicitly designed to circumvent Congress.”

    Congress sees that as a feature; they can’t get blamed for what they did.

  6. 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.(emphasis mine)

    “Well! That pacemaker and those stents, you don’t need that! We will however send you to that palliative PX mgmt. specialist for that pesky chest PX. That knee replacement, Dr. Orthopaedic, may we suggest something a bit cheaper, like an amputation or perhaps a ton of cortisone shots? Diabetic? That Lantus doesn’t grow on trees and insulin pumps are costly. Just go old school with that short acting insulin and sliding scale your way to insulin resistance. We aren’t denying care, just making *suggestions* on how you can make our your practice more *cost effective*”

    1. “payment incentives and disincentives designed to shift provider behaviors”

      I give you Fee-for-Service

      1. FEh. Patients hate it because not enough shit is “covered” in a managed care plan and co-pays and deductibles are too high. They aren’t insulated enough from the true cost for service. People who remember the Communist-style HMO’s may have a good idea what’s coming and rude awakening for those that don’t.

        1. way too many Americans have no idea about the Communist-style systems. They only know that Barbara Walters told them Cuba was a model we should adopt, and then Michael Moore echoed that thought.

      2. “…like in a managed care plan…”

    2. See that’s exactly what Medicare should be. A shitty medicare system that DOESN’T give away nearly as much free shit as some people would like it to.

      I am FOR that. Less free shit for everyone.

      1. Are you for making gov’t schools worse too?

  7. A 30 year old ne’er do well who’s demanding that the government give her free stuff she should be paying for herself is an all too apt symbol of what Barack Obama has spent his last four years doing. ? John Hawkins


  8. CNN Headline News is currently showing LIVE footage of two deer being rescued off a frozen pond…

    Thank Zod, someone is reporting the important shit!

    1. Hey, that is a lot of venison and deer sausage being saved from waste….wait, what?

      1. My new Labor Supvr brought me the loin cuts from a fresh doe kill he made. Running in the woods two days ago, on my plate today, never frozen in between.

        Pan fried it in some olive oil with a bit of garlic – that was it. NOMNOMNOM! SO good. I hadn’t had venison in forever. Fresh, tasty Mom of Bambi – the absolute best.

        1. Bambi, himself, would be better.

          More tender.

        2. I absolutely love venison. Give me some!

    2. While they’re at it, could the deer trample Nancy Grace?

  9. 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.

    Um, hello? The ratchet only allows movement in one direction, and that’s toward MOAR.

    So concern about whether and how “cuts” will be made is, shall we say, superfluous.

  10. I don’t know which side to be on on this.
    The R’s are against IPAB not because it is a big-government intrusion on people’s lives, but because it cuts elderly white voters’ benefits. In other words, they’re against it for the same reasons they want to “save medicare” – to pander to the “keep the government’s hands off my medicare” vote.

    Meanwhile, the D’s are only for it because they felt pressured to do *something* about Medicare costs, and whenever the price of something in the market is too high, the D’s always resort to technocratic socialist solutions like price controls, which is precisely what the IPAB does.

    So the D’s are going “Yay price controls!” while the R’s are going “Don’t cut my Medicare!” and I can’t support either of those positions.

    Arguably, keeping the IPAB in place could be better in the long run because it will inevitably turn medicare into just the kind of archane bureaucratic hell that every other socialized industry inevitably descends into. It will also probably do a much better job of actually containing costs than whatever the R’s will propose, because the R’s will be so desperate for the votes of elderly white racists that they will promise a heart-and-lung machine in every pot.

    So I kind of have a creeping urge to support the IPAB, because it will give the D’s exactly the kind of medical care they deserve. And it won’t cost me as much as a all-you-can-eat Medicare buffet that the R’s are likely to serve up as an alternative.

    1. but because it cuts elderly white voters’ benefits.

      Though the majority of Medicare recipients are “white”, Hazel, not all of them are of that demography. How about just “elderly” since anyone over 65 is forced enrolls in it?

      because the R’s will be so desperate for the votes of elderly white racists that they will promise a heart-and-lung machine in every pot.

      Same criticism as above: Not everyone on Medicare is a “white” racist; some are racists of other demographies.

      Why don’t you just kill them now against their will and get it over with? Damn those Kulaks, right?

      1. Sure, but the problem is that the Republican demographic base is increasingly confined to elderly white people who like their medicare. Many of whom are racist.

        If the R’s can’t find a way to appeal to younger, and non-white voters, then they have to appeal MORE to the elderly white ones. And they can’t afford to be picky about which ones are racist and which ones are fiscal conservatives.

        Which is why the R’s have increasingly become the party of “saving medicare”, and adding new benefits to it. They have to keep the voters they have. And the voters they have are disproportionately dependent on Medicare.

        The R’s have a choice before them: They can either hang onto their aging base and turn into the party of elederly white racists who like their medicare, or they can find a way to sell small government to younger, more diverse, voters.

        1. Tough hump to get over, and they’d pretty much ahve to do it en bloc. Is the US voting popul’n expected to continue to age, or have we hit a steady state? Do we have to root for a baby boom?

  11. We need an IPAB equivalent to set the price for every legal procedure out there. Draw up somebody’s will? $50 from the government, and you can’t charge a single penny more.

    Health care won’t be fixed until we start applying the same horrid schemes on the lawyers fron which the Politician Class is drawn.

    Besides, we all know that there’s not a single lawyer out there who does anything worth more than minimum wage.

  12. Why politics has been put in to Obamacare, as it is for welfare for people. it must be very Clear and transparent for people.
    Medicare Benefits

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