Republican Representative Phil Roe frequently gives speeches about what he calls the perils of Obamacare. A gynecologist from Tennessee, he’s especially worked up about one part of the law: the Independent Payment Advisory Board, a government-appointed panel intended to help slow the growth of Medicare spending. The 15-person IPAB will propose Medicare cost cuts if the growth in the program’s spending exceeds inflationary targets. But that’s not how Roe sees it. He envisions closed-door meetings where “unelected bureaucrats” make decisions that lead to rationing—a scenario hyped by Sarah Palin and other conservatives who warn the IPAB is really a “death panel” that will sit in judgment over Americans’ health claims, denying costly care to the old and weak. Roe is pushing a bill that would get rid of the board. “This is not something we want to do to our seniors,” he says.
Sounds scary. Except the IPAB doesn’t have anything close to that kind of power. The law makes it clear that the panel has no authority to ration care or cut benefits for Medicare recipients. It can’t touch reimbursements to hospitals until 2020. Instead, it’s expected to find savings by eliminating fraud and reducing payments to private insurance companies that work with Medicare and prescription drug providers. And it can only do that if the government is projected to spend more than it’s supposed to.
Each spring, the Office of the Actuary of the Centers for Medicare and Medicaid Services forecasts how much the programs will cost two years in the future. On April 30, it will issue its per-capita estimate for 2015. The actuary will also release a spending target, based on predictions about the pace of health-care inflation. If the increase in expected Medicare costs exceeds the spending target, the IPAB steps in to propose cuts. It will take a three-fifths Senate supermajority to reject its recommendations, and then legislators must find alternative cuts that achieve the same savings. Senators can’t resort to the usual stalling tactics: The law allows them to debate the IPAB’s proposal for 30 hours max, making it filibuster-proof.
The hyperbole surrounding the board shows why it may not be such a bad idea, at least in theory. For all its avowed concern about runaway entitlement spending, Congress is too scared to do anything about it. Not many politicians in Washington are willing to make enemies of the elderly, who are vocal and vote, or the health-care industry, which receives billions of dollars from Medicare and rewards legislators who keep the cash flowing. “There’s nobody representing taxpayers,” says Robert Berenson, an Urban Institute fellow and former vice chairman of Medicare Payment Advisory Commission, which counsels Congress on Medicare. “There’s a lot of people representing doctors, hospitals, and medical device manufacturers.”
While Republicans fret about power-hungry bureaucrats taking over health care, President Obama appears to be having trouble finding people willing to take a job that in reality has little influence and not much appeal. The White House, which declined requests to comment on its efforts to recruit IPAB members, has yet to name anyone to the board, even though it’s supposed to get to work by the end of April.
The law requires the panel to be made up of prominent doctors, economists, hospital executives, and insurance industry representatives. Candidates are subject to Senate approval, which means they must endure potentially hostile public hearings. “They are going to be held to a high level of scrutiny,” says Senator John Barrasso, a Wyoming Republican and orthopedic surgeon. “We’re going to have tough questions. We’re going to demand answers to know where they stand and then make decisions about each one of them individually.” Barrasso has made it clear where he stands. He’s a co-sponsor of the Health Care Bureaucrats Elimination Act, a bill that would do away with the IPAB.
Board members willing to go through all that must also agree to serve for six years, full time; they have to quit their current jobs because of conflict-of-interest concerns. “They are going to have to lead this Rapunzel-like existence hidden away somewhere in a tower,” says J.D. Kleinke, a health-care economist who’s writing a book on Obamacare. The salary of $165,300, though respectable, is far less than top doctors and health-care executives typically make. And the life of an IPAB member may be rather dull, since its powers kick in only if spending is surging. In March, the Congressional Budget Office forecast that Medicare costs aren’t likely to spike for the next decade. Chapin White, a senior researcher at the Center for Studying Health System Change, attributes this to cost-control measures that are already in effect as a result of the Affordable Care Act. “The ACA has definitely pushed the Medicare spending trajectory down,” he says.
That would leave IPAB members with little to do but tinker away on health-care reports the law recommends they write every other year. But Congress can just ignore those. “Who wants to drop their careers to go onto a board that’s going to pay you very little money to say ‘let’s fight fraud’?” asks Dana Goldman, a health-care economist at the University of Southern California. “I think a better approach would be to let them do it part time.”
No wonder Obama has yet to announce his candidates. The drafters of the Affordable Care Act seem to have anticipated such ambivalence. If there’s no IPAB in place by the time its services are needed, the law allows Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services, to do its job until the panel is up and running. “Everybody is focused on 15 unelected people,” says Berenson. “But the key part of the IPAB is that there’s a trigger mechanism which forces somebody to recommend cuts to stay within the spending target. The activity doesn’t go away.”