Medicare Spending Tug of War Continues

“Granny” is in the health policy crosshairs yet again. This time, it’s IPAB – the Independent Payment Advisory Board, the topic of two separate House hearings this week – that will theoretically unplug her, ration her, or sink her with the Titanic.

(The IPAB assault on grannies – in case you try to Google it, as I did – is not to be confused with the new IPAD app of grannies killing zombies. The description on the Web says gamers can deploy Grandpa against the zombies too but only if they unlock him.)

House Republicans are cranking up the volume on the independent board, which was created in the 2010 health reform law. Two separate House committees, Budget and the Health Subcommittee on Energy and Commerce, are holding hearings on IPAB this week, with Secretary Sebelius expected to testify. The tone is likely to be contentious.

A handful of Democrats also oppose IPAB, but for different reasons. They generally support health reform, but want Congress to keep control of Medicare spending decisions or to have more flexibility in setting parameters of Medicare spending growth. So far, there are not enough anti-IPAB Democrats to tip the balance politically in favor of repeal. The Obama administration strongly supports IPAB. Indeed the president has proposed strengthening the board, but given that Republicans are portraying the board as Death Panels 2.0 expansion’s not too likely at the moment either.

“Democrats like to picture us as pushing grandmother over the cliff or throwing someone under the bus. In either one of those scenarios, at least the senior as has a chance to survive,” Georgia Republican Rep. Phil Gingrey said at a recent news conference that brought together Republican physicians serving in Congress. “But under this IPAB… that the Democrats put in Obamacare, where a bunch of bureaucrats decide whether you get care, such as continuing on dialysis or cancer chemotherapy, I guarantee you when you withdraw that, the patient is going to die.”

“It’s rationing,” Gingrey added.

“The question,” added Oklahoma Republican Sen. Tom Coburn at the same event, “you as a patient, as a Medicare patient, do you want to be in control of your health care or do you want a bureaucrat from Washington to be in control of your health care? And that’s really the essential question.”

IPAB is back in the news in sort of a double whammy. It’s part of the 2010 health law, which is still the subject of a great deal of partisan and ideological warfare in Congress. And it’s a mechanism for controlling health care costs – specifically Medicare costs – which is certainly smack in the middle of the big Washington stalemate over taxes, spending, and entitlement, which is heading for either a resolution or a crisis – or perhaps a big Beltway punt – before the debt limit ceiling is reached on August 2.

Of course, IPAB does not have the power to decide whether or how much dialysis granny gets. To the contrary, the panel’s authority was significantly circumscribed in the quest to garner 60 votes in the Senate back in the fall of 2009. The 15 member panel cannot ration care, nor can it change Medicare eligibility or determine what beneficiaries pay. Nor can IPAB act by fiat. Congress still has the power to accept or reject the recommendations. If it rejects the recommendations, it must by law come up with another way of achieving the same savings in Medicare.

In April, President Barack Obama suggested giving IPAB more power to backstop against excess Medicare spending. But Republicans have rallied around House Budget Committee Paul Ryan’s plan to turn Medicare into a “premium support” plan. Consumers and the market will do a better job, in their view, of shaping the Medicare of the future than a government-appointed panel with, in their view, far too much power and far too little accountability.

The only poll I’ve seen recently on IPAB, done by the Kaiser Family Foundation as part of its June tracking pool, found that the public actually has more trust in a panel of independent experts than it has in insurers that would play a larger role in a Republican scenario for Medicare’s future. That probably should not come as a surprise.

IPAB was created in the Affordable Care Act, a way to put some backbone in cost-containment in case a lot of the mushier and unproven delivery system reforms don’t work – or don’t work quite as fast as the economic times demand. The more we’re stuck in fee-for-service circa 2010 (some would say circa 1965), the bigger role IPAB is likely to play as a cost containment trigger.

Some analysts see IPAB’s very existence as a catalyst for change. Change-averse doctors and hospitals may be much more likely to start adopting some of the care innovations encouraged by health reform – whether it’s becoming an accountable care organization, or giving some of those new care transition models a try – if the alternative is letting IPAB start setting the terms.

At first IPAB is to submit proposals on how to reduce Medicare’s per capita growth rate if spending is higher than the target (a blend of 5 years of spending based on a formula – and the formula changes to what will probably be stricter limits in 2018). Through 2019, the board can’t recommend cuts to hospitals and hospices — which has doctors and other providers worried that they will bear the brunt of any changes.

The independent board was created in frank recognition that Congress does not always make, or stick to, tough decisions about providers and health care costs. Not only has Congress had trouble with the perennial doc fix, it has also struggled with issues like motorized wheelchairs, competitive bidding for durable medical goods, how often women should have mammograms and at what age, and so on. These are in part technical questions and lawmakers don’t necessarily have the expertise. They are also political questions – the lobbying and jockeying can be intense. And they are even cultural questions. We live in such a “newer, bigger, better” culture that people don’t always understand that older and cheaper may sometimes be better in medical treatment. All of this means that every decision becomes a potentially political one. As the arguments around Avastin’s usefulness as a breast cancer drug illustrates, the wave of expensive new drugs with questionable benefits – or questionable for some patient populations – is only going to intensify.

Some of the lawmakers who have lived through these challenges for years have reached the conclusion that Congress should set broad policy, but shouldn’t be micromanaging pricing and benefits. Among those who pushed ideas that later helped pave the way for IPAB was former Senate Majority Leader Tom Daschle. He put forth the idea of a Federal Health Board, modeled after the Federal Reserve, that would have considerable authority over all federal health spending, not just Medicare. IPAB has fewer powers and a narrower mandate than the panel Daschle envisioned, but it does address Daschle’s chief concern, that legislators shouldn’t be making complex technical decisions about medical care and the price and or utility of medical services.

Not all the opposition to IPAB is coming from the right. At least five House Democrats have backed its repeal, including Allyson Schwartz, of Pennsylvania, a former health care executive who has some influence on health care among her fellow House Democrats. She has said she wants Congress to keep the full authority over Medicare, and fears that IPAB will make arbitrary cuts, when innovation and payment and delivery system reform are better approaches to tamping down costs.

Bruce Vladeck, who ran Medicare during President Clinton’s administration, has also criticized the independent board. He says there should be a happy medium between Congress trying to set hundreds of prices down to the penny, and transferring authority to an independent board. One suggestion is for Congress to give CMS outlines of cuts – this many dollars from labs, that many from imaging, etc. – but give CMS the authority to work out all the moving parts and details. He fears that the “independent” Medicare board will lose its independence, and become beholden to the industry as, in his view, other regulatory agencies have. Plus he said he suspects Congress will overrule IPAB if it makes tough decision. IPAB, in his view outlined at a recent health policy event in DC, will make Medicare economics more complicated, but not better.

Still, so far the Affordable Care Act has withstood Republican assaults. Nothing major has been repealed, and so far it’s still largely funded. It’s unlikely that IPAB will be repealed. But it’s also unlikely that the 15 members will be appointed and confirmed in a timely manner with no recriminations or fireworks.


Contributing Writer Joanne Kenen writes monthly news features for the Health Policy Forum discussing health policy innovation and “what works” in our health care system, as well as the politics of health policy and reform. As a leading nonprofit health care research and consulting institute dedicated to improving human health, Altarum encourages open discussion and debate about the many challenges in health care today. All postings to the Health Policy Forum (whether from employees or those outside the Institute) represent the views of the individual authors and/or organizations and do not necessarily represent the position, interests, strategy, or opinions of Altarum Institute. Altarum is a nonprofit, nonpartisan organization. No posting should be considered an endorsement by Altarum of individual candidates, political parties, opinions, or policy positions.


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