• My reports of the demise of IPAB were premature

    Yesterday I was quite glum about IPAB’s future, since the March CBO report estimated zero savings over the next decade.

    Today, President Obama focused on the CBO problem quite specifically and lowered the IPAB threshhold.  It’s safe to say that a bigger, tougher IPAB is the centerpiece of his Medicare cost control strategy.  This is actually the big health policy news from the speech – the President won’t run from the death panelistas. From the fact sheet:

    The President’s framework proposes specific reforms to strengthen Medicare and Medicaid over the long term, including:

    • Addressing the long-term drivers of Medicare cost growth: The President’s framework would strengthen the Independent Payment Advisory Board (IPAB) created by the Affordable Care Act. The IPAB has been highlighted by economists and health policy experts as a critical contributor to Medicare’s solvency and sound operations. Under the Affordable Care Act, IPAB analyzes the drivers of excessive and unnecessary Medicare cost growth. When Medicare growth per beneficiary exceeds growth in nominal GDP per capita plus 1 percent, IPAB recommends to Congress policies to reduce the rate of growth to meet that target, while not harming beneficiaries’ access to needed services. Congress must consider IPAB’s recommendations or, if it disagrees, enact policies that achieve equivalent savings. If neither acts, then the Secretary of Health and Human Services would have to develop and implement a proposal to achieve the savings target.
    • The President’s framework will strengthen IPAB to act as a backstop to the other Medicare reforms by ensuring that Medicare spending growth does not outpace our ability to pay for it over the long run, while improving the program and keeping Medicare beneficiaries’ premium growth under control. Specifically, it would:
    • Set a new target of Medicare growth per beneficiary growing with GDP per capita plus 0.5 percent. This is consistent both with the reductions in projected Medicare spending since the Affordable Care Act was passed and the additional reforms the President is proposing.
    • Give IPAB additional tools to improve the quality of care while reducing costs, including allowing it to promote value-based benefit designs that promote proven services like prevention without shifting costs to seniors.
    • Give IPAB additional enforcement mechanisms such as an automatic sequester as a backstop for IPAB, Congress, and the Secretary of Health and Human Services.
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    • “IPAB recommends to Congress policies to reduce the rate of growth to meet that target, while not harming beneficiaries’ access to needed services.”

      It’s really that part about not harming access to needed services that is tough, isn’t it?

    • Sounds like an IPAB with sharper teeth. My concern here remains privately insured patients. Can we really quarantine off Medicare and lower its costs without addressing the private sector? If the gap between Medicare and private care becomes too large, what happens?

      Steve

      • No. Separating Medicare from the rest of the system will not work politically. Related, Medicare can’t be what it has been if what it pays becomes too out of whack from what everyone else pays.

    • The discussion about IPAB’s role in reducing unnecessary and ineffective care sounds good, but most of it is hype. The IPAB is prevented by the new law from changing benefit packages, increasing co-pays, and reducing hospital payments for an extended period. The only thing it can do is reduce payments to doctors. Reducing fees that already do not cover my fixed cost for providing the service is simply going to create an access crisis. I know some ways to reduce costs but they all involve restricting unnecessary and futile care.

    • @Bruce – the new “super” IPAB proposed yesterday fixes many of the weaknesses you describe – an acknowledgment that the original law had many weaknesses