Medicare Reform: IPAB Could Save Health Care From Partisan Havoc


Time and time again, Congress has proven that it is unable to control Medicare spending, repeatedly spending more than forecasted since the start of the program. Much of this problem can be attributed to political pressures that congressmen face when voting on legislation. The rising costs of Medicare cannot be maintained, but both Republicans and Democrats are afraid of losing voters, and thus both parties continue to avoid making cuts.

The Independent Payment Advisory Board (IPAB) allows for a freethinking body of experts to review and revise the Medicare structure void of political interests. The recommendations made by IPAB can be implemented and altered quickly, allowing for experimentation to help identify successful and unsuccessful ways to reduce spending while maintaining a high level of quality care for Medicare beneficiaries.

As part of the Affordable Care Act, the IPAB is a board made up of 15 members appointed by the president who are responsible for recommending policy measures which control and reduce the growth of federal Medicare spending starting in the fiscal year 2015. The board is only responsible for making recommendations if Congress is unable to pass Medicare cost-controlling legislation on their own. In this case, the IPAB recommendations will become law, in essence allowing the board to act as unelected policy makers. Restrictions placed on the IPAB prevent the board from recommending anything that rations care or changes benefits, eligibility, cost sharing, or premiums- all extremely basic measures to cut costs.

Another, more obvious area in which to reduce spending would be in reducing physician reimbursements. (Under the law, hospital and nursing home reimbursements are also protected until 2020.) This measure has not been restricted, but proves impractical for other reasons. Reducing physician reimbursements would quickly lead to a system where beneficiaries can't find doctors to treat them, limiting the effectiveness of this option.

With the most evident policies for cutting costs off-limits, these experts will be forced to dive deeper and rethink the fundamental nature of the Medicare system in order to meet their goals. It is still unclear what kinds of recommendations the IPAB will come up with, but with short term Medicare spending goals in mind, their policies will certainly look different than Congress's.

In 2009, Atul Gawande published a paper in the New Yorker titled "Testing, Testing," which highlights the potential importance of the IPAB in reforming our health care system. Gawande compared the agricultural sector in 1900 to the health care sector today. In 1900, when an average household spent 40% of their income on food, increased spending in the agricultural sector was a national concern. Today, this concern runs parallel to national concern about 18% of our GDP being spent on health care.

In 1900, the government did not have a solution to reducing the cost of food production. Instead, the government began running “pilot programs” which could be quickly implemented, altered, cut or enhanced depending on their success. As Atul Gawande puts it “a feedback loop of experimenting and learning” enabled this 40% of income spent on food to drop to just 8% today.

The IPAB will allow for the process of experimenting and learning that we need for the health care sector today. We currently do not have the solutions to reduce spending, but devoting 15 experts to finding practical policies is exactly what the country needs.

By restricting the IPAB from rationing or reducing care, the board is encouraged to alter the way the system works. The IPAB needs to look at ways in which hospitals, physicians, and pharmaceutical companies get paid as well as consumer incentives. They need to find policies which encourage improvement in quality, rather than an increase in quantity, of health care. By restricting the board from making “cuts,” that is exactly what the IPAB will do.

Concerns that the IPAB is a “death panel” that will “ration” care are simply false ideas that the Republican Party are using to instill fear in the American people. The IPAB is restricted from doing exactly that. Instead, the IPAB will be focused on improving efficiency and reducing wasteful practices in order to maintain or increase the level of care for Medicare beneficiaries while maintaining a feasible budget.