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Moving Forward With Medicare’s IPAB

June 24, 2016 at 2:30 PM

Two events this week drew new attention to the Independent Payment Advisory Board (IPAB) — a presidentially appointed commission charged with developing ways to slow the growth of Medicare spending.  Medicare’s trustees reported that projected Medicare spending growth will likely trigger the IPAB process for the first time in 2017 and require the board to make recommendations in January 2018 for implementation in January 2019.  At the same time, House Republican leaders issued a health care plan proposing to repeal IPAB.

Repealing IPAB would be unwise, as we’ve explained.  Here’s why:

  • The charge that IPAB will ration health care is false.  The health reform law, which created IPAB, specifically prohibits it from rationing health care, raising Medicare’s premiums or cost sharing, cutting benefits, or restricting eligibility.
  • IPAB won’t usurp Congress’ role in setting Medicare policy.  Congress can structure Medicare so that it meets health reform’s spending targets without calling upon IPAB.  Even if projected spending exceeds the targets, triggering IPAB’s involvement, Congress can modify IPAB’s proposals through legislation.
  • Alternatives to IPAB would be far worse for Medicare beneficiaries.  IPAB can play an important role in improving the efficiency of the health care system.  If Congress repeals IPAB, it’s likelier to consider blunt proposals that would cut benefits or shift costs to beneficiaries.  For example, the new House Republican plan would raise Medicare’s eligibility age from 65 to 67 over time.  It would also replace Medicare’s guarantee of health coverage with premium support — a flat payment (or voucher) that would likely become increasingly inadequate to purchase high-quality coverage. 
  • IPAB provides an important backstop to health reform’s other cost control measures.  Health reform trims excessive Medicare payments to health care providers.  It also takes steps to restructure the health care payment and delivery system to stop paying providers for more visits or procedures and begin rewarding effective, high-value health care.  While these efforts have contributed to the recent slowdown in Medicare and overall health care costs, IPAB serves as an important backstop to contain costs if they fall short.

Now that the trustees’ report suggests that the IPAB process will likely be triggered in 2017, the Administration that takes office in January should promptly nominate IPAB members and the Senate should confirm them expeditiously so that the board will be ready to carry out its duties if it must do so next year.