Living in a post IPAB world

  • by: |
  • 03/09/2012

Those who opposed the health care bill are debating whether “repeal and replace” should be the clarion call in the coming election. Regardless of how this debate turns out, those in favor of doing better should focus their immediate attention on identifying and fixing the most harmful parts of the bill. The Independent Payment Advisory Board, or IPAB, should be a top target.

Sometimes dreams do come true.

IPAB needs to go, but the goal of reigning in Medicare expenses is a worthy one. As is, the program’s costs are spiraling out of control: Medicare is projected to accumulate a $38 trillion budget shortfall during the next 75 years.

Not only does IPAB further grease the slippery slope towards government price controls and rationing -- it doesn’t even have any authority over the biggest cost-drivers in Medicare.

Medicare Part A, for instance, is so expensive its reserves will be empty by 2017, according to the Medicare Trustees. Part A covers in-patient hospitals stays. By 2035, the program’s revenues will only finance about half of promised benefits.

Medicare Part B, which covers out-patient services, has similar cost problems. Administrators just raised Part B premiums on nearly a quarter of beneficiaries because expenses have gotten so high. And an analysis from the Congressional Research Service found that without substantial hikes in Part B premiums, the program’s finances are “at risk of exhaustion.”

Yet the IPAB has no power over Part A or Part B.

If left unaltered, Medicare could literally bankrupt this country.

Last June, HHS launched two important new health care cost-saving initiatives.

First, the HHS announced it would make $42 million available to enhance coordination efforts between primary care physicians and other health care providers treating Medicare patients. The potential savings are estimated at $125 billion over the next 10 years.

Second, the HHS launched a $40 million effort to help states combat chronic disease. Chronic diseases are responsible for 75 percent of our health care costs—diabetes, heart disease and strokes alone account for nearly $1 trillion in medical spending annually.

Both initiatives have the promise to save money and lives. Unfortunately, they represent the opposite approach to Medicare cost control set forth in the Affordable Care Act.

On one hand, the two new HHS initiatives show that the Obama administration is making credible efforts to target the areas of the health care system that could produce the most savings. On the other hand, the Affordable Care Act through IPAB seeks to devalue efforts such as these in favor of squeezing doctors and other providers.

The right way forward is to get rid of IPAB and substitute for it a Medicare cost-savings plan that encourages long-term strategic thinking along the lines of these HHS studies.

Support for IPAB is rapidly and rightly collapsing as citizens become better informed about the danger this all-powerful panel of unelected bureaucrats poses to their health care. It’s time to urge Congress to get rid of IPAB and stand up for real Medicare reform.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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