Congress can Take a Bold Step Toward Obamacare Repeal by Eliminating IPAB

David Williams

November 1, 2017

Congress has seen no shortage of false starts in its efforts to repeal and replace Obamacare this year. Political drama amongst lawmakers kept even a “skinny repeal” from entering the books, at a time of double-digit premium increases caused by the failed legislation. While the future of repeal and replace is uncertain, Congress has the opportunity to once and for all eliminate one of the law’s most infamous institutions – the Independent Payment Advisory Board (IPAB).

During the original debate on Obamacare, IPAB was referred to as a “death panel,” because once appointed, the board would have the power to implement unilateral changes to Medicare with potentially life-threatening implications for beneficiaries.  And, because IPAB would solely be focused on cutting costs, rather than maintaining care, treatment quality may well suffer as a result. Effectively, the care of 55 million Americans would be placed in the hands of fifteen unelected bureaucrats not required to answer to Congress, the White House or taxpayers. And without any prospect of judicial or administrative review, decisions made by IPAB or cut reimbursement payments would be extremely difficult to reverse.

If implemented, IPAB will have a singular mission to reduce Medicare spending. While this is a noble cause, the only way IPAB will be able to accomplish the goal of showing immediate savings is by making arbitrary decisions as to how “cost-effective” certain treatments would be for the quality-of-life improvements promised by the drug or therapy. And, as Britain’s equivalent of IPAB, National Institute for Health and Clinical Excellence (NICE), shows, making these sorts of cost-benefit valuations proves to be completely arbitrary.

As pointed out by Forbes editor Avik Roy, NICE recommended that the National Health Service only cover a treatment for age-related macular degeneration (Lucentis) if beneficiaries were already blind in one eye. In the minds of NICE bureaucrats, the high-cost of the drug would only be worth it if the therapy rescued patients from total blindness, rather than just blindness in one eye. Although the Institute reversed its guidance the following year, the damage had already been done and valuable lessons had been learned about the government’s inability to make subjective decisions about quality of life issues.

Besides arbitrarily cutting off access to life-altering drugs, IPAB can also show significant savings on paper by reducing reimbursement payments to physicians. But as citizens have seen with Medicaid’s subpar performance, lower reimbursement rates across the board correspond with a worse, not better, quality of care. Instead of toying around with reimbursement rates and drug approvals, health reform must focus on market driven approaches that drive down costs by giving consumers and patients more choice and control over their own health. Focusing on the supply-side and eliminating onerous certificate of need laws can bend costs down far faster and more effectively than federal tinkering.

Luckily, IPAB has yet to be implemented, giving lawmakers time to consider better policy approaches.  But unfortunately, the threat of bureaucratic overreach into seniors’ healthcare looms over the program each year. Therefore, Congress should see the Children’s Health Insurance Program (CHIP) reauthorization debate in the next few weeks as an opportunity to repeal IPAB. Further, because IPAB is still theoretical and has achieved neither savings or contributed costs, Congress should be able to repeal without an offset.

Lawmakers stand at a critical juncture in the fight for quality, cost-effective healthcare across the country. While a path toward full repeal has not yet been outlined, Congress must seize on this opportunity to overturn one of the most problematic provisions of Obamacare. By doing so, legislators will put power in the hands of consumers, not tie the hands of patients and providers with more government red tape. 

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