Why Does (Almost) Everyone Hate the IPAB?

04/20/2011 04:32 pm ET | Updated Jun 20, 2011

What IS the IPAB you ask? If you know the answer to this, you will score big points with your friends, because only about .5% of the population knows the answer. The IPAB is the Independent Payment Advisory Board established in the health reform bill to help keep Medicare spending under control. Sounds good, right?

Actually, almost everyone hates the idea of the IPAB. Everyone, that is, except more than 200 economists and health care researchers, the former head of OMB, Peter Orszag, and of course the president of the United States, who made the IPAB a central part of his deficit reduction proposal last week. In fact, he recommended strengthening not repealing it. The reason for the president's strong support is the conclusion reached by many economists that the type of decisions that need to be made about Medicare spending require independence and expertise.

Here's what the IPAB is, and why so many groups fear its power. The Board would be composed of 15 members appointed by the president (and subject to Senate confirmation). The members would be physicians, patients, the elderly, economists, health insurers, employers and researchers. This board would be asked to recommend ways to control Medicare spending, triggered by a certain percentage increase in Medicare costs each year. The recommendations of the Board each year must be approved by Congress in their totality unless Congress can come up with options for savings that are similar to what the Board has proposed. Sort of a "base closing" kind of up-or-down vote. There are safeguards for Medicare benefits, however.

With regard to IPAB's recommendations, the law says:

The proposal shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums under section 1818, 1818A, or 1839, increase Medicare beneficiary cost sharing (including deductibles, coinsurance, and co-payments), or otherwise restrict benefits or modify eligibility criteria.

There are many reasons why this type of Board faces opposition. Its independence from the political process is both an advantage and a disadvantage. It's an advantage because recommendations about reducing Medicare costs probably should be done by independent experts (including patients), not by politicians, who can be swayed by financial contributions and pressure from their health care constituencies. It's a disadvantage for the same reason. The IPAB would be largely independent of congressional control. Politicians do not want to give up the opportunity or responsibility to tweak Medicare, and both Democrats and Republicans oppose the Board for that reason. Many health industry and physician groups also oppose the Board because it could have too much power to reduce or change their rates of reimbursement. Consumer and patient groups have doubts about what the recommendations might do to patient care and coverage (even though the law forbids the Board from reducing benefits). Add to that the difficulty of coming up with recommendations for cuts when you cannot touch benefits or raise revenue, and you get the picture. This is not a popular program.

The arguments against the IPAB are both substantive and ideological. Republicans say that health care recommendations by the IPAB will be made by bureaucrats or "experts" you don't know (and would be a government takeover of course). Actually that's the way these decisions are made right now in the way Medicare is administered by private sector plans, and how is that going? Do you know the people in your insurance plan or in the Medicare bureaucracy who are making the decisions about your benefits? They may be bureaucrats, but is it comforting that they are "your" or "Congress's" bureaucrats? It is true that this Board would not be as accountable to the Congress as it would be to the president, but the IPAB is not completely without accountability given the opportunity for Congress to come up with its own solutions if it doesn't like what the Board recommends.

As members of the public and current or future patients or Medicare beneficiaries, should we hate the IPAB too? Should we oppose the idea? It all depends on where you think the authority for controlling the cost of Medicare should reside. If you believe that an elected official would make better decisions about Medicare spending, then you would oppose the IPAB. If you think appointed experts from a variety of fields of expertise, then you would support the IPAB. Whatever you believe, there will be plenty of hyperbole launched around this board in the next few months as the federal budget is debated. I personally believe that the IPAB can play an important role in helping to keep Medicare viable, and I think the president has taken a courageous stand in supporting it. Whether it will survive the budget negotiations in the coming months is not clear.