In his assault on President Obama’s health reform law at last week’s debate, Mitt Romney took aim at a favorite GOP target: the Independent Payment Advisory Board, a panel of Senate-confirmed experts who will advise the government on Medicare payment rates. Some lawmakers have derided it as a “rationing board” or even a “death panel.” Republicans see it as the most heavy-handed idea in a heavy-handed government intervention in the health care sector.
The new board cannot actually ration care, cut benefits, or say who lives and who dies. But the critics are right that it will fundamentally shift authority for Medicare payment policy away from Congress and toward unelected officials. IPAB will have the authority to develop payment proposals that save Medicare money, and it will be tough for Congress to override them. Yet this should thrill Republicans. If they lose in November, IPAB could be the only body able to achieve the savings that the GOP says exist in the huge health care entitlement program.
Romney’s Medicare proposal would change the program from one in which every senior has access to government insurance to one in which seniors would use government subsidies to choose in a marketplace of plans. In theory, competition would drive down the cost of coverage, achieving savings for the federal government. But to implement this notion, Republicans will need to win both houses of Congress and the White House. And even if they do, Romney’s plan wouldn’t go into effect for 10 years, so lawmakers may need to find other deficit savings in the near term.
What else could they do? Lawmakers have just a few, politically tough, alternatives: cut payment rates to providers (on top of the 2010 law’s existing reductions), or ask seniors to pay higher premiums and deductibles. Obama has proposed some small-scale changes of this nature, but not substantial cuts. Health care industries have already begun lobbying to protect their payment rates and preferential policies.
IPAB would essentially let Congress set hard budget targets without having to make the tough choices about which constituencies to alienate. In years when spending growth exceeds predetermined rates, the board can tame outlays by proposing its own changes to payment schemes (as long as it doesn’t ration care or increase costs for seniors). If Congress does nothing to stop them, those proposals become law. If Congress has a better idea, 60 senators and a simple House majority can pass their own version that achieves the same savings.
Given current projections, IPAB won’t get a chance to act for years. But the president has proposed legislation to ratchet down the budget cap. If Congress enacted this proposal, the board could become a cost-saving tool much sooner.
Practically, that’s not too different from the GOP’s approach to Medicare. Republicans want to shift seniors into private plans, which would wrest payment policy decisions away from Congress and toward private insurers. Like IPAB’s restrictions on benefit cutbacks, Romney promises that his plan will require insurers to cover all Medicare benefits. But in the same ways that IPAB-imposed payment policies could steer seniors toward some services and away from others, insurers can incentivize providers to offer certain services to their beneficiaries. When Romney talks about competition driving down the cost of insurance, this is precisely what he is hoping will happen: Seniors will reward products that steer patients toward lower-cost care, and the process will be insulated from lobbying pressures. The key disagreement is about whether private or government actors are best suited to find these savings; it’s not about the underlying need for reform.
So far, the board has done nothing at all. Although it received a $15 million budget in the last fiscal year, Obama has failed to nominate a single member to the body. To form the board, its 15 full-time members will need to be confirmed by the Senate, a daunting prospect given GOP opposition to IPAB. But post-election nominations are almost certainly in the works if Obama wins, and senators would be wise to let some of the nominations go through. If the board fails to make recommendations when required, its power is transferred to the secretary of Health and Human Services. Instead of 15 “unelected bureaucrats” calling the shots on Medicare policy, the country will be left with just one.
This article originally appeared in print as "Popular Target."
This article appears in the October 13, 2012 edition of National Journal Magazine.