House Votes to Repeal Unpopular Obamacare Medicare Panel

By Alex Ruoff

Obamacare’s most potent tool for slashing health-care costs is likely to be taken down by the same forces it was designed to circumvent: Congress and the health-care industry.

The House Nov. 2 voted to repeal a controversial Medicare cost-cutting panel created under the Affordable Care Act. While Democratic leaders opposed the bill over financing concerns, lawmakers from both parties have long supported repealing the panel on the grounds it would take oversight of Medicare out of their hands.

“We can’t allow unelected bureaucrats to make these decisions,” Rep. Raul Ruiz (D-Calif.), a main sponsor of the IPAB repeal bill in the House, told Bloomberg Law.

The Independent Payment Advisory Board (IPAB) was designed to force lawmakers to make tough funding decisions for Medicare, the U.S. health-care program for the elderly and disabled, or forgo their authority if the cost of the program ever began to grow too quickly and became unsustainable.

That threat has proven widely unpopular, particularly among Republicans.

The 15-member panel has never been convened and has no members because Congress has never agreed to fund the panel and because Medicare cost increases so far have been less than the level called for under the law to trigger action by the payment board. Neither President Barack Obama nor President Donald Trump has nominated any IPAB members.

The panel, if convened, would propose cuts to Medicare payments that would bring Medicare back under target levels that are based on rates of consumer inflation and U.S. gross domestic product. IPAB’s proposals would be sent to Congress for fast-track consideration that would become law unless lawmakers act to make their own cuts or block the panel’s proposals.

ACA’s Affordability Goal

Key members of the Obama administration pushed to include provisions in the ACA aimed at reducing the cost of health care, including the creation of IPAB, Ed Lorenzen, senior adviser for the bipartisan Committee for a Responsible Federal Budget and a former House Democratic budget aide while the ACA was being debated, told Bloomberg Law.

At the time, Medicare spending was growing on average by 9 percent per year, nearly twice the rate of growth during the previous decade, according to a Kaiser Family Foundation analysis.

Some of these provisions, like those creating accountable care organizations and others testing new Medicare payment models, have proven popular among some lawmakers and effective. They gave the administration the authority to experiment with new Medicare payment models, Lorenzen said, and influence private insurers.

After 2010, total Medicare spending growth has held to an average of 4.4 percent per year. Many researchers credit the ACA for this slowdown in spending growth.

Controversial Changes

However, IPAB has always been controversial, Jay Cost, a conservative political historian who writes for the Weekly Standard, told Bloomberg Law, and has faced accusations from Republicans it would lead to deep cuts in Medicare payments to doctors and hospitals.

The panel’s creators wanted a congressional workaround, a tool for making difficult choices about Medicare that federal lawmakers tend to avoid, he said. At the time, lawmakers were struggling to deal with Medicare’s sustainable growth rate, a designed cut to physician payments Congress annually postponed for more than a decade.

“Medicare is a tough program to take on because it affects people in every district,” Cost said.

Medicare also has powerful industry friends.

More than 100 health industry groups, from the American Medical Association and AdvaMed to the American Hospital Association, have lobbied to repeal IPAB since passage of the ACA, according to an analysis of lobbying data. More than 700 of these groups Nov. 1 asked Congress to repeal IPAB this year.

These groups are worried any proposal to cut Medicare spending would mean less money to doctors and hospitals serving Medicare patients.

“The fundamental challenge of most health-care policy is each dollar of spending is someone’s revenue,” Matt Fiedler, a fellow with the Brookings Institution’s Center for Health Policy, told Bloomberg Law.

Controlling Medicare

Lawmakers who voted to repeal IPAB admit they’re not doing enough to control Medicare spending, which totaled $3.7 trillion in 2015. The federal Medicare Trustees found the main trust fund behind Medicare will be exhausted in 2029, according to a report released in July.

Rep. Phil Roe (R-Tenn.), who has sponsored every IPAB repeal since the ACA passed, told Bloomberg Law there’s disagreement generally about which areas of Medicare spending need to be targeted: drug costs, hospitalizations, or physician payments. He said these are thorny issues that can’t be easily tackled.

However, he said Congress shouldn’t relinquish control of Medicare simply because finding savings or curbing costs is difficult.

“It’s our responsibility,” he said.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

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