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Repealing Medicare’s Cost-Cutting “IPAB” Would Be Bad for Beneficiaries

The House is scheduled to vote next week on whether to repeal the Independent Payment Advisory Board (IPAB) — a presidentially appointed commission that the health reform law created and that will help slow the growth of Medicare costs.  Our new paper explains why criticisms of IPAB are off-base and why repealing it is a bad idea.

Critics charge that IPAB will ration health care, but that’s false.  Health reform specifically prohibits the board from rationing health care, raising Medicare’s premiums or cost sharing, cutting benefits, or restricting eligibility.  It must focus exclusively on proposals that achieve savings in the payment and delivery of health care services.

In fact, if Congress repeals IPAB, the alternatives will likely prove far worse for Medicare beneficiaries.  In that case, Congress will more likely consider blunt proposals that would shift significant costs to beneficiaries, such as sharply increasing premiums and raising the eligibility age.

Most important, repealing IPAB would fuel efforts to replace Medicare’s guarantee of health coverage with “premium support” — a fixed payment, or voucher, that beneficiaries would use to help them buy private health insurance or traditional Medicare.  This arrangement would achieve budgetary savings by limiting the growth of the voucher to less than the rate of growth of health care costs.  As a result, beneficiaries would have to pay more in premiums or receive less in benefits with each passing year — precisely what health reform directs IPAB to avoid.