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Dean v. Orszag on IPAB

July 31, 2013
11:25 am

The opposition to the Affordable Care Act’s Independent Payment Advisory Board (IPAB) gained public support this week from what was, to some, an unlikely voice.  Former Vermont governor and one-time Democratic presidential candidate Howard Dean penned an op-ed in The Wall Street Journal urging that congressional Democrats and Republicans join together to repeal IPAB.

He wrote, “One major problem is the so-called Independent Payment Advisory Board. The IPAB is essentially a health-care rationing body. By setting doctor reimbursement rates for Medicare and determining which procedures and drugs will be covered and at what price, the IPAB will be able to stop certain treatments its members do not favor by simply setting rates to levels where no doctor or hospital will perform them.”

The Dean op-ed spurred immediate, and often harsh, criticism from the political left.  One of the first opinion pieces responding to the Dean criticism came yesterday from former Office of Management and Budget director Peter Orszag, a strong and consistent IPAB supporter.  Mr. Orszag wrote on the Bloomberg website that “the point of having such a board….is to create a process for tweaking our evolving payment system in response to incoming data and experience, a process that is more facile and dynamic than turning to Congress for legislation.”

Of course, I encourage everyone to read both op-eds and form your own opinions on where the most valid arguments lie.  Here are some of my thoughts:

  • Some call it a major surprise that a fervent liberal like Governor Dean would oppose IPAB.  Actually, I think it’s logical that he sees the problems with the concept.  As a physician, Governor Dean understands the perils to patient access to care if an appointed board is empowered to reduce what physicians are paid for treating Medicare beneficiaries.  We’ve already seen reports this summer that the number of physicians opting out of Medicare is nearly triple what it was three years ago.
  • Any debate over IPAB invariably turns to the subject of healthcare rationing.  Mr. Orszag makes the point in his op-ed, as IPAB defenders often do, that the Affordable Care Act language prohibits the board from rationing care.  This is a technically accurate assertion, but it obscures real-world consequences.  If IPAB reduces Medicare payment rates, it will inevitably affect access to physicians.  This may not be rationing in the purest sense of the word, but tell that to the senior who can’t find a doctor.
  • Governor Dean makes a broader point in his op-ed that warrants further amplification and debate.  He wrote that “rate setting – the essential mechanism of the IPAB – has a 40-year track record of failure.”  This point of view needs to be part of a larger debate on structural Medicare reform.
  • Mr. Orszag invests IPAB with a role that the Congressional Budget Office doesn’t foresee.  He writes that the board will be able to make the subtle adjustments in Medicare made possible by new delivery and payment models like accountable care organizations.  In reality, though, as CBO has pointed out, IPAB must make changes that bring Medicare spending down to an arbitrary level within a one-year timeframe.  This will inevitably mean straightforward cuts in what Medicare pays for healthcare goods and services.

The headline of the Orszag op-ed is “Critics Are Wrong About the Medicare Payment Board.”  And yet, Governor Dean’s arguments clearly show that the critics have a compelling point and that IPAB repeal should be a bipartisan congressional priority.

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