Earlier this week, the House Energy and Commerce Health Subcommittee moved legislation forward that would repeal one of the most intrusive and unpopular parts of Obamacare: the Independent Payment Advisory Board (IPAB). A board of unelected government officials tasked with finding and implementing ways to control Medicare spending from the top-down, IPAB opens the door to rationing of care, both direct and indirect, without congressional approval.
The bill to repeal this onerous part of the health law has 226 co-sponsors, 17 of whom are Democrats. Meanwhile, support for better ways to control Medicare’s cost using a premium support model continues to surface on both sides of the aisle. Premium support would allow seniors to use a defined government contribution to purchase the private plan that suits them best in a competitive marketplace. Patient empowerment and choice would drive better value for dollars spent, bringing down costs without jeopardizing quality or patient autonomy through government rationing.
The White House, on the other hand, continues to cling to its board of bureaucrats and has even proposed strengthening IPAB’s reach and expanding it powers. This week, White House official Nancy-Ann DeParle took to the White House blog to defend IPAB. According to DeParle, rationing won’t occur under the trusty IPAB, but it would in the consumer-driven conservative alternative. IPAB would put “you and your doctor” in charge, she writes, while premium support would put insurance companies in control. And above all, IPAB, according to DeParle, will bring down costs in Medicare, but premium support would do the opposite.
This is nonsense. Sure—IPAB could, in theory, control Medicare costs from the top-down—but not without devastating consequences to quality of patient care. The reason Americans are averse to government rationing is because it takes the power of decision-making out of the hands of doctors and patients and gives government bureaucrats stronger influence over care. IPAB is statutorily prohibited from “rationing,” but the statute includes no formal definition, and the board will still have to restrict access to providers, services, and/or treatments to hold down costs.
The mechanisms available to IPAB will only limit patients’ ability to make decisions by further tinkering with reimbursement and incentives for providers. As Heritage expert Robert Moffit explains, “the board is prohibited by law from proposing real structural reforms. The only cuts it is allowed to make would be cutting providers’ reimbursements.” As we’ve seen time and again in both Medicare and Medicaid, cutting reimbursement may seem like a good way to cut costs on paper, but if cuts actually go into effect, they reduce access. That’s rationing, pure and simple.
So while the White House says that IPAB won’t ration care, while premium support would, Americans should not be fooled.
Today, in the conventional employer-dominated health insurance system characterized by managed care plans, private insurers—working on behalf of employers—can and do place restrictions on health plans to hold down costs. Even so, patient satisfaction with private employer coverage is very high, registering 80 to 90 percent rates of satisfaction. But in a consumer-driven market such as the popular and successful federal employee program, where insurance plans compete to provide the best care for the lowest cost, the consumer has the final say. Plans that don’t deliver on quality, price, or benefit lose market share. Dissatisfied consumers can take their business elsewhere if they decide one plan manages their care in a way they consider unacceptable. This gets to the crux of the matter: under a premium support model, insurance companies aren’t in charge at all. It’s the patients who choose them—or don’t—who call the shots. IPAB offers no such freedom.
One more thing: DeParle argues that conservative reforms shift costs to patients. But as health policy expert James Capretta explains in a recent Heritage paper, “[T]his analysis relies on two highly implausible assumptions. First, it assumes that the deep payment rate reductions imposed under Obamacare are sustainable.” He goes on: “The second implausible assumption is that competition in Medicare will not affect the efficiency or cost of the options offered to Medicare participants. The whole point of premium support is to build a functioning marketplace in which plans must compete for the business of cost-conscious consumers.”
The IPAB model’s success is necessarily contingent on putting unaccountable government officials in charge of crucial health decisions and limiting patients’ access to care. It’s the only way it will work. So it’s no wonder that as Congress contemplates ways to control Medicare’s unaffordable rising cost, the pendulum is swinging away from this government-centric approach and toward Medicare premium support. That’s the only sensible way to save the program and also protect and empower patients.