IPAB’s CBO problem

The RPM Report gleefully explains that that repealing IPAB today wouldn’t require a budgetary offset:

In the Congressional Budget Office’s latest update on baseline spending projections for Medicare, CBO drops the following bombshell on page 2, footnote d:

“For 2015 and subsequent years, the IPAB is obligated to make changes to the Medicare program that will reduce spending if the rate of growth in spending per beneficiary is projected to exceed a target rate of growth linked to the consumer price index and per capita changes in nominal gross domestic product. CBO’s projections of the rates of growth in spending per beneficiary in the March 2011 baseline are below the target rates of growth for fiscal years 2015 through 2021. As a result, CBO projects that, under current law, the IPAB mechanism will not affect Medicare spending during the 2011-2021 period.”

This isn’t exactly breaking news, since the CBO Director testified on this issue to the House Subcommittee on Health on March 30, 2011 (at p.26):

PPACA created the Independent Payment Advisory Board (IPAB), which has the obligation to reduce Medicare spending relative to what would otherwise occur if the rate of growth in spending per beneficiary is projected to exceed a target rate that is based on inflation (for 2015 through 2019) or growth in the economy (for 2020 and subsequent years). In its February 2011 estimate, CBO concluded that the rate of increase in spending would probably exceed the target rate in some years, and that the IPAB, therefore, would have to intervene to reduce the growth of Medicare spending. CBO estimated that those actions would result in $14 billion in savings over the 2012–2021 period. In CBO’s March 2011 baseline, by contrast, the rate of growth in Medicare spending per beneficiary is projected to remain below the levels at which the IPAB will be required to intervene to reduce Medicare spending. As a result of that reduction in projected Medicare spending, CBO’s March baseline does not include any savings from actions by the IPAB.

The projected growth rate is still very substantial, but just not high enough to trigger mandatory IPAB action.  No word on what triggered the change from February to March and whether April will be different.  Another example of the importance of attention to detail in drafting complex legislation like the ACA (the lack of a severance clause would be another one).  Even Ezra didn’t exactly see this one coming.


Hidden information below


Email Address*