Performance Pay vs. IPAB

by Michael Graham


Mitt Romney’s “pay for performance” model is the perfect counter to President Obama’s government-board IPAB. One approach says, “Hey, I know you want to make a profit, so get smart and make more money.” The other says, “I think you’re corrupt or stupid, so I’m going to tell you what to do.”

President Obama was then forced to say that IPAB “can’t limit your health-care choices.” Okay, then — how does it cut costs? If it doesn’t ration care, what does it do?

The answer, of course, is that it punishes health-care providers who won’t do what they’re told.

One system is human nature and incentives. The other is government bureaucracy trying to get people to obey rules they don’t like.

Which one sounds more likely to succeed?

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