THE BLOG
08/09/2010 12:49 pm ET Updated May 25, 2011

In the Public Interest : New Push To Gut Health Care Cost Containment

Few problems represent a greater threat to consumers, small businesses, and the nation's fiscal future than the unchecked rise of health care costs. And over recent months, even those opposed to the new federal health care law have sought to portray themselves as champions of lower costs and fiscal responsibility. Despite evidence to the contrary from the Congressional Budget Office, these opponents have decried the new law as a budget buster, and called for replacing it with "real" measures to hold down costs.

But in the final weeks of the recent Congressional session, reform opponents in the Senate, by offering legislation to repeal the Independent Payment Advisory Board, revealed that their heated rhetoric about costs was little more than empty words.

Under current law, this board, called IPAB by policy wonks, would consist of physicians and medical experts who make recommendations on how to rein in the rising costs that are bankrupting Medicare and Medicaid. Congress does not have to accept the recommendations, but if they do not they must offer an alternative that saves just as much taxpayer money. Otherwise, the original IPAB recommendations go into effect. The whole process is designed to force the country's elected representatives to face up to the hard decisions about health care cost containment which they have so often dodged.

The IPAB repeal legislation, Senate Bill 3653, enjoys the sponsorship of a formidable set of Senators, including Republican Senate Campaign Committee Chairman John Cornyn (R-TX), Minority Whip John Kyl (R-AZ), budget hawk Tom Coburn (R-OK), 34-year Senate veteran Orrin Hatch (R-UT),and even former Presidential candidate John McCain (R-AZ). It even boasts an impressively focus-grouped name, calling itself the Health Care Bureaucrats Elimination Act.

Despite its catchy title and powerful sponsors, S. 3653 would not make health care more efficient by getting rid of pointless red tape. What it actually does is blow an even bigger hole in America's long-term deficit.

When the Congressional Budget Office examined the fiscal consequences of unchecked health care inflation in their June 2010 Long-Term Budget Outlook, their "alternative fiscal scenario" painted an all-too-plausible picture of how rising deficits and debts might overwhelm the nation's economy. But far from avoiding that frightening eventuality, eliminating key cost containment provisions in the new health care law, including the IPAB, was a key premise of the "alternative fiscal scenario."

CBO finds that the elimination of all these provisions starting in 2020 would result in an increase in yearly federal health spending totaling over 1% of GDP by 2035 over CBO's baseline projections of current law. That amounts to a substantial blow to the nation's long-term fiscal health.

But there are more immediate reasons that make S. 3653 a bad idea. Abolishing the IPAB would deprive the country of $15.5 billion in projected deficit reduction during the current decade. Remarkably, the bill's co-sponsors failed to provide a single dollar to offset these costs. The elimination of the IPAB would also remove an important spur to the transformation of the health care delivery and payment system. The IPAB process, after all, was designed to drive the adoption of cost-savings alternatives to the wasteful, inefficient fee-for-service system currently bankrupting Medicare.

During the health care debates that raged over recent months, Senators may have disagreed about the prescription needed to cure America's health care ills, but at least they found consensus on the diagnosis of what ails us: unchecked health costs. Yet now, these Senators have advanced a bill that would exacerbate America's fiscal challenges rather than alleviate them.

Whatever their political party or view of the original health care law, each and every Senator ought to reject this new legislation as a step backwards on health care costs.