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Dean v. Orszag: Why Democrats are fighting about IPAB

August 1, 2013

    Juliette Mullin, Editor

    Remember IPAB? You may know it better as the Obamacare "death panels."

    Since it was first conceived, the little-understood Independent Payment Advisory Board (IPAB) has been a top Republican target because it's been framed as an "unelected board that will ration health care spending." (As originally drawn up under the Affordable Care Act, the IPAB was intended to be a last-ditch panel that makes cuts to rising Medicare spending when Congress proves unwilling.)

    But last weekend, Howard Dean—a physician who served as governor of Vermont, a one-time candidate for president, and the former head of the Democratic National Committee—joined the chorus of criticism, too.

    Dean: IPAB 'essentially a health-care rationing body'

    Writing in Sunday's Wall Street Journal, Dean does have a lot of good things to say about the ACA. According to Dean, the law will "move America closer to universal health coverage" and he applauds its accountable care organizations. He even outlines the benefits of delaying the employer mandate by one year.

    But IPAB, he writes, is a "major problem," calling it "essentially a health-care rationing body." Beginning next year, IPAB's 15 advisers must submit annual cost-cutting proposals to Congress whenever the five-year growth in Medicare spending per beneficiary is expected to exceed a set growth limit. And those proposals would be automatically implemented unless Congress enacts legislation to block it. 

    Dean argues that "rate setting—the essential mechanism of the IPAB—has a 40-year track record of failure." He points to Vermont and other states that have implemented rate-setting schemes, which didn't cut costs but did make health care become "more bureaucratic."

    Dean notes that he's not alone: Twenty-two Democrats have signed legislation that would eliminate IPAB.

    Related: Partisan gridlock stymies efforts to tweak health law

    Orszag: Dean mischaracterizes IPAB

    In his column for Bloomberg News, Peter Orszag—the former head of the Office of Management and Budget and one of the ACA's architects—writes that Dean and other IPAB opponents "continue to mischaracterize the whole point of the board."

    Specifically, IPAB's proposals are prohibited from including efforts to restrict benefits, raise premiums or cost-sharing, change eligibility criteria, or ration care.

    He explains, "The point of having such a board—and here I can perhaps speak with some authority, as I was present at the creation—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."

    In a nutshell, Orszag argues that the health system will need constant adjustment as it moves away from fee-for-service models, and that physicians are best positioned to make those adjustments.

    Orszag was not alone in his critique of Dean's column. For instance, the Los Angeles Times' John Healey outlines how Dean "mischaracterizes" IPAB, explaining that he is "confusing the [ACA] board with mechanisms that already exist in Medicare to determine what's 'medically reasonable and necessary.'"

    IPAB is not in the imminent future

    Either way, Dean's critiques take aim at a board that is still more theory than reality. All 15 would-be members of IPAB must be confirmed by the Senate, and any Obama nominee is unlikely to obtain the necessary 60 votes to overcome a filibuster. In addition, the board may hold little-to-no appeal for qualified candidates who would be required to forgo all other employment during their six-year board term.

    Moreover, the board's cost-cutting powers are unlikely to kick in anytime soon. The Congressional Budget Office last year said Medicare would stay below the spending threshold until 2022. (If we hit that threshold before IPAB is filled, though, the cost-cutting power appears to go to the secretary of HHS.)

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