• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Medicare Rationing and Obama’s Unelected Board of Bureaucrats

    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.

    Posted in Obamacare [slideshow_deploy]

    11 Responses to Medicare Rationing and Obama’s Unelected Board of Bureaucrats

    1. The quality of patient care is at a serious risk.

    2. steve h says:

      IPAB makes a great deal of sense to me, can't understand why someone would oppose it, though i can see why private health insurers would oppose it sicne they would lose ability to do whatever they want. IPAB is prohibited to recommend rationing care, unlike what the current system or Republicans plans offer..and IPAB is prohibited from modifying premiums and costsharing, unlike under Repub plans. I like the idea of 15 experts suggesting ideas that might work, instead of letting the insurers decide everything. Amazes me how you side with insurers over best interest of country and patients.

      • Lisa says:

        This is not about the best interest of country and patients for health insurers, this is about the government taking away our freedom to choose. If you don't like private insurance then go with the government plan, but leave those that are satisfied with their private insurance out.

      • P Ficarra says:

        Working on the health care billing side of things I can plainly tell you why I would oppose it. My experience is in dealing with different payors (aka insurances)whose members (aka doctor's patients) have many different health plan products (hmo, ppo, pos, medicare, etc). Out of all of the various health plan products Medicare reimburses medical providers the least, by far. Because of this Medicare members are routinely singled out by medical providers as those most likely to be eliminated from the patient list because each and every year caring for Medicare patients ends up being a losing proposition which in a large majority of cases does not or just barely covers the cost of seeing the patient. Its not that Medicare patients are being shunned rather it comes down to making the tough decisions to just keep the doors open. Insurance payors do ease some of the cost burden by structuring contracts to allow higher reimbursement on the commercial plans (hmo, ppo, etc). So it comes down to a cost shifting to other non-Medicare patients.
        (cont'd)

        • P Ficarra says:

          Each year the provider community that services the Medicare population have to deal with the specter of drastic cuts to the already low Medicare physician reimbursement. Typically Congress passes legislation that delays the cuts as they did in the last several days for 2012 but this is no way to do business. In my opinion the only reason why doctors still see Medicare patients is because of the cost offsets that are shifted to commercial insurance plans which I can only imagine drives up their insurance premiums. Having to deal with this firsthand everyday my opinion is that govt intervention and the very existence of Medicare and Medicaid drives up cost across the board since doctors are forces to shift the cost burden. I don't have all the answers but from my end the govt health plans work the least efficiently, reimburse the least and would seem from where I'm standing to drive up cost on everyone else.
          –Just the opinion of someone who lives it everyday.

      • Paul says:

        @Steve, show me a government run enterprise which runs efficiently? In addition, beurocrats making decisions in isolated Washington D.C., cannot be knowledgeable of circumstances and patient needs in Soiux Falls, South Dakota!

      • mike says:

        did you actually read the article? it addresses the so-called prohibition on rationing. it's just more big government semantics.

      • Laura Henning says:

        Steve H, did you read the above article? You say "IPAB is prohibited to recommend rationing care" and "IPAB is prohibited from modifying premiums." Those sttements are simply innacurate. IPAB will recommend what treatments will be availaable and what the government will pay for those treatments. If it rules that a certain treatment is not to be used or cuts the Medicare reimbursements to physicians and hospitals for treatments, health care providers will not provide them, thus rationing healthcare for seniors.

        Furthermore, under proposed Republican healthcare plans insurers will NOT "decide everything." They will be competing for premium dollars and have to satisfy their customers to keep their business. It's called the COMPETITIVE free enterprise system. Steve H., I suggest you read up a little more on the healthcare field.

    3. Bobbie says:

      IPAB has no limits. Because they work for government they're free to ration for any reason by government at a needless cost where the private sector does not have the freedom to do whatever they want, take much better control and where payments are proven to be unable to make, exceptions often are. Why shouldn't the costs be the persons' that wakes up every morning in control of their behavior, actions, food intake, health? Sure would control the population if everyone was expected their rightful duty to pay their individual expenses their freedom to act, costs.

      Freedom/Personal responsibility, something socialism, totalitarianism, fascism, communism, collectivism, the president's medical coverage, doesn't support!

    4. DEfromDC says:

      Obamacare is part of enslaving Americans to the government. When fully implemented the government will own us. Who wants a board of bureaucrats making medical decisions for them. Obamacare has been inplace for about 100 years on the indian reservations. Look what it has done for them.

    5. Larry W says:

      If memory serves and if history repeats and if “I’m here from the government and I’m here to help you” remains the citizen’s most intimidating words; bureaucrats are the worst choice for health care decisions. “…Bureaucratic Despotism is more dangerous than socialism.” Dr. Larry Arrn, President Hillsdale College.
      This Administration’s czars (45 and counting) have stated their intentions, rationing and “ by definition, universal health care is wealth distribution.” All we have to listen to them and BELIEVE THEM.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×