Critical Condition

Sebelius in the Hot Seat over IPAB

Tempers are flaring in Washington’s sweltering July heat over the looming government default. The debate is also heating up over one of the scariest parts of Obamacare: the powerful, unelected, 15-member Medicare payment board.

Health Secretary Kathleen Sebelius testified before two hearings in one week about the controversial Independent Payment Advisory Board (IPAB). She did everything she could to downplay its powers, insisting it is only a “stopgap” and won’t be needed if Congress does its job in cutting Medicare payments to meet strict targets.

See Exhibit A, the current budget battles in Washington, as a predictor of whether or not Congress could get that done.

Opposition to IPAB runs deep. Rep. Frank Pallone (D., N.J.), the top Democrat on the Energy and Commerce Health Subcommittee, said he has no interest in defending the board. “I’ve never supported it, and I would certainly be in favor of abolishing it,” he said.

Few Democrats are willing to defend IPAB, and some are working hard to repeal it, including Rep. Allyson Schwartz of Pennsylvania who has co-sponsored repeal legislation with Rep. Phil Roe (R., Tenn.).

IPAB symbolizes everything that is wrong with Obamacare — taking power away from doctors and patients and putting it in the hands of elite experts who have virtually no accountability to voters.

Under current law, Medicare is on track to pay doctors less than a third of what private health insurers pay. IPAB could make even deeper cuts to keep spending within Obamacare’s fixed budget, and President Obama has called for the board to cut Medicare further to help with deficit reduction. 

During the House Budget Committee hearing, Chairman Paul Ryan challenged Secretary Sebelius to explain how doctors and hospitals will be able to provide services if Medicare payments are cut so deeply that they don’t even cover doctors’ costs.

Secretary Sebelius — who was literally in the hot seat as she testified in the hearing room that reached 90 degrees — avoided the question and, instead, offered utopian promises about the incredible cost savings and efficiency gains that will come from government-directed and regulated programs. 

And she worked hard to deflect attention from IPAB with inaccurate charges about the Ryan Medicare plan. Not a good idea with Ryan sitting right there. The congressman was well able to explain the need for competition, choice, and modernization of Medicare’s financing, which his premium support plan would create.

The Energy and Commerce Health Subcommittee, chaired by Rep. Joe Pitts (R., Pa.), also invited Secretary Sebelius to the witnesschair.

She continued to downplay IPAB and insist that the health-care law will do what never has been done before: Regulate the health sector into efficiency. And she continued to deflect the focus from IPAB by criticizing and mischaracterizing the Ryan plan.

It is astonishing that she has the gall to do that when she is presiding over Obamacare, which takes $575 billion out of Medicare to create two shockingly expensive new entitlement programs, and creates the all-powerful IPAB, which will quickly dry up access to care for seniors.

At another Budget Committeehearing on the topic, Rep. Tom Price (R., Ga.), a physician, asked chief Medicare actuary Rick Foster what the impact would be of deeper cuts in payments for Medicare services.

“We’d like not to find out,” Foster replied, stressing that “the potential access problems could be very serious.”

The health-overhaul law calls for cuts in payments to Medicare providers that will mean they fall below current payment rates for Medicaid. “We see with the Medicaid program, of course, in some states the payment rates — particularly for physicians — are quite low and the access to care is quite low,” Foster said.

Under current law, Foster predicts many Medicare providers will go bankrupt. He says more than 40 percent of them eventually would end up “shifting to negative profit margins” – i.e., losing money — and will either go out of business or stop seeing Medicare patients altogether.

And IPAB will be charged with cutting payments even more than Obamacare does in order to reach ever-declining statutory targets. Unless Congress can muster super-majority votes to come up with its own cuts to reach the same targets, the dictates of these unelected technocrats will carry the force of law.

I testified before the Budget Committee’s IPAB hearing and warned that this unelected board will ultimately determine policies for spending hundreds of billions of dollars, impacting care for tens of millions of seniors, with no judicial, administrative, or – realistically — congressional intervention. This challenges the very principles of representative democracy and consent of the governed.

Doug Holtz-Eakin, former CBO director and current president of the American Action Forum, also testified that, “IPAB is fatally flawed, structured to punish innovative health-care providers and threaten seniors’ access to care. . . . It continues Washington’s obsession with price-fixing in Medicare’s separate silos rather than changing the incentives that have led to rampant overspending, fraud, and uneven care quality.”

Georgetown University professor Judith Feder was the third witness, cheering the health-care law and IPAB, and calling for Congress to expand its powers to direct all health-care payments. Feder stood alone in her enthusiastic defense of IPAB and later indicated that she hopes to serve on the board.

IPAB is ripe for repeal. “Many Democrats agree with Republicans that IPAB should be repealed,” said Rep. Pitts. “I hope that we can come together across the aisle and stop this unaccountable and possibly unconstitutional board from taking power away from the people’s representatives.”



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