President Obama’s plan to control Medicare spending — an expert board of cost-cutters — might have trouble even coming into existence.
The candidates clearly disagree about whether the IPAB is the right approach. Obama described it as a panel of experts leveraging Medicare’s purchasing power to bring down healthcare costs, while Romney cast it as a band of faceless bureaucrats whose decisions will ultimately undermine seniors' access to care.
Health policy experts say the IPAB won't turn out to be as sinister as Romney described it, but it also might not be as effective as Obama envisions. In fact, it could be a struggle to even get the board up and running.
The Affordable Care Act sets up the IPAB as a 15-member board including doctors, academics and other “individuals with national recognition for their expertise in” health economics and other parts of the healthcare system.
The board members will be appointed by the president and confirmed by the Senate. And that’s the hitch — only about 57 percent of Obama’s civilian nominees have been confirmed in the 112th Congress, and finding consensus could get even harder if Republicans pick up seats, if not the majority, in November.
And the White House has had an especially hard time with nominees to controversial positions, including the Consumer Financial Protection Bureau and the National Labor Relations Board. Obama resorted to recess appointments for those positions, and Republicans challenged the legality of that move.
The IPAB is just as controversial. If Romney wins the presidency, one healthcare lobbyist said, he might not appoint anyone to the IPAB, assuming Republicans can’t repeal the healthcare law.
Democrats would likely have to offer enormous concessions just to get a vote on IPAB nominees, the lobbyist suggested.
The White House did not respond to questions about what would happen if the IPAB board cannot be confirmed.
Despite the low confirmation record for Obama’s nominees, former Congressional Budget Office Director Douglas Holtz-Eakin said the board will probably come into existence at some point.
“There’s a limit to how far you can push some of these things. At some point you’re just being obstructionist,” said Holtz-Eakin, a critic of the Affordable Care Act who now leads the conservative American Action Forum.
Some stakeholders also question whether the White House will be able to find 15 qualified people willing to give up their day jobs to work full-time on an unpopular board whose decisions will surely meet harsh criticism.
Even if Obama can win confirmation for the IPAB board, or use recess appointments, some critics question whether it will be very effective.
Some of Obama’s liberal allies complained about a deal that exempted hospitals from the IPAB’s cuts until 2020, making doctors and drug companies especially vulnerable to cuts.
The IPAB is not allowed to cut Medicare benefits or increase seniors’ cost-sharing — it can only cut payments to doctors and other providers. It’s not allowed to “ration” care, despite Republicans’ attacks.
“This board that we’re talking about can’t make decisions about what treatments are given; that’s explicitly prohibited in the law,” Obama said during Wednesday’s debate.
But those limitations also mean the IPAB only has limited tools to try to control Medicare spending.
“The question is, can you rely on continued reimbursement cuts to hit targets?” Holtz-Eakin said. “It’ll succeed at first, it’ll impose cuts, but in the end you just can’t control costs that way.”
The IPAB’s job is to identify payment cuts if Medicare spending rises faster than a certain rate. After the first few years, the IPAB will kick in if Medicare rises faster than inflation plus 1 percentage point.
The board technically makes “recommendations” to Congress, but as a practical matter, its cuts will take effect automatically unless Congress votes to block them — and comes up with equivalent savings.
A healthcare lobbyist suggested that the IPAB’s cuts could become a sequel to the “doc fix” — the scheduled cuts in doctors’ Medicare payments that Congress scrambles to avoid at least once a year. Medicare’s chief actuary has raised the same possibility concerning the healthcare law’s other Medicare cuts, saying Congress could end up postponing them time and time again, just as it does with the doc fix.
That prospect is precisely why the IPAB’s recommendations are so hard to override. Its biggest advocates, including former White House budget director Peter Orszag, have likened the IPAB to the independent commission that Congress relies on to close military bases, effectively taking difficult political decisions out of Congress’ hands.
But the reliance on outside experts is one of Republicans’ biggest complaints.
“He has … a board of people, at the government, an unelected board, appointed board, who are going to decide what kind of treatments you ought to have,” Romney said during last week’s debate.