Health Care

Good Riddance to IPAB, the Independent Payment Advisory Board

On controversial matters, expert panels are no substitute for the political process, however messy.

The bipartisan budget deal passed last week left conservatives feeling betrayed. Spending was increased massively, even though Republicans have majorities in both chambers and President Donald Trump is in the White House.

Yet there was a victory, of sorts, in the bill — the elimination of the Independent Payment Advisory Board (IPAB).

Created as part of the Affordable Care Act in 2010, the IPAB was supposed to be a panel of experts tasked with keeping Medicare spending under control. A great theory, but a total disaster in practice. IPAB was in reality a nugatory body: It never had members nominated, let alone confirmed to it, its budget was slashed again and again, and both Democrats and Republicans wanted to do away with it .

In its editorial-cum-obituary for the panel, the Washington Post spread the blame for IPAB’s demise far and wide:

Responsibility is hard to sell. Though President Barack Obama and his staff defended this mechanism, they flinched at the prospects of cuts on his watch, scheduling the board to begin its work, if necessary, after he was reelected. Meanwhile, the board became a target for demagogues. In their effort to whip up hysteria over the law’s supposed “government takeover” of health care, Republicans ludicrously insisted that the IPAB was a “death panel.” When that didn’t kill it off, the health-care industry took over, spending millions over the years on television ads and other campaigns to kill the IPAB. Every bit of waste is some companies’ profit, and the industry wasn’t going to let it go without a fight — though of course it pretended to be fighting on behalf of patients.

Yet for all this finger-pointing, the Post never managed to identify the real culprit: The IPAB was a bad solution to the problem of entitlement spending.

The IPAB embodied over a century of various progressive orthodoxies — to the point that former Office of Management and Budget director Peter Orszag’s 2011 defense of the board, in The New Republic, could easily have been written in, say, 1913. The problem with entitlement spending, by this reckoning, is politics: Individual members of Congress favor their own constituencies or donors even when doing so harms the country as a whole. The appropriate response to correct this is to strip Congress of power and transfer it to nonpartisan experts who have the knowledge and dispassion to trim the fat (rather than muscle or bone) from Medicare.

Sitting in the background of this notion was the success of the Base Realignment and Closure (BRAC) commissions of the 1980s and 1990s. Congress seemingly had a similar problem with military bases. Forty years after World War II, many bases had become old and outdated, yet Congress could not bring itself to act. The parochial interests of members whose bases were on the chopping block consistently skunked the endeavor. So Congress outsourced the task to the Department of Defense, whose experts determined which bases were no longer necessary and submitted to Congress a proposal that had to be voted upon up or down, without amendments.

The IPAB was supposed to work similarly. If per capita growth in Medicare was projected to exceed a certain amount, the IPAB was charged with formulating cuts to reimbursement rates for specific medical procedures and drugs; the proposed cuts were then to be fast-tracked through Congress for an up or down vote. If the legislature refused to act, then the IPAB recommendations would become law automatically.

But the problem is that Medicare cuts are not like closing military bases. The DOD was more or less able to come up with a set of recommendations that reflected the consensus of experts. But such consensus is elusive with health services. Consider, for instance, the controversy in the fall of 2009 when the government’s Preventive Services Task Force issued new recommendations on breast-cancer screenings. It called for screenings every other year between the ages of 50 and 74, fewer than what medical experts had previously called. In response to a public outcry, Health and Human Services Secretary Kathleen Sebelius had to disavow the government’s own board: “The U.S. Preventive Services Task Force is an outside independent panel of doctors and scientists who make recommendations. They do not set federal policy and they don’t determine what services are covered by the federal government.”

Now, imagine giving the Task Force’s recommendations the force of law, and you get something close to what IPAB could have become: an extremely powerful agency making controversial decisions about health spending. That may be a far cry from the “death panels” that Sarah Palin once warned about, but it is still a problem.

This is why there was a massive, bipartisan effort to kill IPAB before it ever came into actual being. President Barack Obama appointed exactly zero members to the Board, and congressional Democrats never called for him to do so. Moreover, the House effort to repeal IPAB last year was bipartisan, with the law sponsored by Republican Phil Roe of Tennessee and Democrat Raul Ruiz of California. It passed through the lower chamber by an overwhelming 307–111 margin.

Institutional innovations cannot solve what is, at its core, a political problem. And make no mistake: Entitlement spending is a deeply political problem.

Ultimately, the failure of IPAB demonstrates a narrow point as well as a broad point. The narrow point is that, as conservatives have known for so long, the progressive faith in expertise is often misplaced. There is controversy among experts about what we should do and what we should not do with regard to health services, meaning that the chances of cutting a payment that many deem vital were high. Of course, experts are useful even when they disagree, because they can inform the debate; nevertheless, in the absence of consensus, they should not get the final say, which is effectively what the IPAB granted them.

The broad point is that institutional innovations cannot solve what is, at its core, a political problem. And make no mistake: Entitlement spending is a deeply political problem. The truth is that the United States has committed to spend substantially more on senior care than it is now prepared to pay. That means one of two things have to happen: radical changes to the social contract, or sweeping new taxes to finance the existing arrangements. This is not a problem for the experts to handle by making abstruse technocratic adjustments to complicated payment schedules. It is, rather, a problem for the people at large to confront: Higher taxes or reduced spending? Public problems such as these simply have to be handled through the “political” process, which is just another way of saying the republican tradition of campaigns, elections, and governance.

Jay Cost is the author of The Price of Greatness: James Madison, Alexander Hamilton, and the Creation of American Oligarchy.

Jay Cost is a visiting fellow at the American Enterprise Institute and the Center for Faith and Freedom at Grove City College.


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