July 20, 2014 at 1:08 pm ET
The ‘Death Panel’ With a Thousand Lives
Five years after the passage of the Affordable Care Act, one of the most controversial initiatives created under the healthcare law has no money, no members, and increasingly, at least in the near-term, no purpose.
The Independent Payment Advisory Board (IPAB), sometimes referred to as ‘death panels’ by some conservatives who have argued that it bestows powers to unelected officials that belong to Congress and could lead to rationed care for the elderly, has seen its raison d’etre swept away under an avalanche of good news.
Until recently, Congress knew only two ways to discuss Medicare, and that was in terms of the entitlement program nearing insolvency and the outsized percentage of the federal budget that it encompassed. IPAB was created to control Medicare spending costs by giving the 15-member panel the power to cut doctor payments under the program – a dramatic and near impossible feat for Congress to achieve on its own – whenever the per-person costs surpass the average of two consumer pricing indexes.
But the IPAB became a political lighting rod during the 2010 elections, and Republicans effectively neutered the panel by slashing its budget and signaling to the White House that it would have a tough time confirming any appointees it might send before the Senate Finance Committee. The Obama administration still hasn’t nominated anyone to the board, and didn’t return a Morning Consult query as to whether it had plans to.
Regardless, the administration now has little reason to do so. Last November, the White House Council of Economic Advisers released a chart showing three consecutive years of downward revisions for Medicare outlays.
They can add a fourth trophy to the bottom right-hand portion of that chart, as the CBO this week released another report showing further downward revisions.
While health experts are busy cataloging the ways the CBO has managed to continue its streak of wide forecast revisions, most believe the myriad factors contributing to the overall health spending slowdown, as well as some provisions of the ACA, are responsible for containing federal Medicare spending and extending the projected life of the program.
This has important implications for IPAB.
“Under current law, growth in Medicare spending will remain below the IPAB’s target growth rate during the next decade,” CBO wrote in its most recent report.
A decade is a political eternity for a federal board that’s been hanging on by a thread, so healthcare experts have mixed feelings about what this means for the future of IPAB.
Robert Berenson, a senior fellow at the Urban Institute, told Morning Consult that we’re so far away from the panel’s Medicare wire getting tripped that the existence of board is presently nothing more than an “academic exercise” whose primary function has been “rendered moot” for the foreseeable future.
He likened it to the National Healthcare Workforce Commission – also borne out of the Affordable Care Act – which is suspended in a zombie-like state. The NHWC still exists, but it doesn’t have a budget and has never met, even though its members were recently appointed to a second term.
Berenson said he wouldn’t be surprised to see IPAB stay in this dormant state for years to come, as its peripheral functions are redundant, and can be fulfilled by either Health and Human Services Secretary Sylvia Burwell, or by MedPAC, Congress’ Medicare Payment Advisory Commission.
But the whole idea of a zombie is that it doesn’t stay dead forever, and Berenson, as well as three other healthcare experts interviewed by Morning Consult, agreed that IPAB could someday return to fulfill some purpose, even if it’s different from the one its creators envisioned for it when the healthcare law was in its infancy.
First of all, if there’s one lesson to be taken from the CBO’s healthcare spending course corrections, it’s that trends can change unexpectedly. Remember when preliminary healthcare spending data from the first quarter of 2014 had experts in a panic over unexpected fast growth?
“We’re trying to pull apart what’s behind this continued slow growth and what needs to be done to make sure it doesn’t come back up,” said Commonwealth Fund vice president Stuart Guterman. “But there’s always that lingering worry that we’ll hop back on that track where cost growth will continue at its previous pace.”
Rand Corp. senior policy research Chapin White and Brookings policy director Louise Sheiner concurred, saying there are still too many unknowns surrounding the present slowdown to assume that structural changes have truly provoked the kind of long-term slowdown that the federal models are forecasting.
In addition, there’s always the possibility that government meddling could contribute to reversing current trends. Republicans in Congress are constantly looking for ways to reign-in aspects of the health law, and White said if they were successful in removing productivity adjustments or readmission penalties, it could boost Medicare per capita spending. He also noted that Congress could unilaterally ramp up payments to providers based on the realization that they’re seeing far greater savings than anticipated.
And as unlikely as it seems, the White House budget actually proposes lowering the threshold that would trigger an IPAB response, potentially moving up the date for when IPAB would be summoned to respond. The present Congress won’t take up the president’s proposal, but on a long enough timeline, anything is possible. The CBO noted as much in its report.
“The IPAB mechanism will generate savings in some subsequent years…because variation in Medicare’s spending growth will probably cause it to exceed the target rate in some years,” the agency said.
The CBO pointed to what some analysts are calling the ‘Silver Tsunami’ of Americans that will become eligible for Medicare in the coming years.
This will likely drive up overall Medicare spending, although it’s open for interpretation as to what this means for Medicare per capita spending.
“There are so many unknowns and this can’t go on forever,” White said. “IPAB could become relevant again because we’d be in a position where Congress needs to step in and respond to suddenly faster growth in spending.”
The experts agreed that IPAB is at the very least a solid safety valve to protect against an unexpected spending reversal. Former Health and Human Services secretary Kathleen Sebelius argued the same to Congress at a hearing last year where she attempted to downplay the panel’s authority.
“What if there’s a big increase in spending that we don’t expect? It might not happen for a while, but it’s certainly not impossible,” Sheiner said. “[IPAB] saves money and it doesn’t cost too much – it’s like an insurance policy. If we’re wrong on our projections, we have this in place, so I think it does matter.”
Berenson agreed, saying it was a necessary backstop because Congress has “demonstrated its inability to take tough positions.”
Therefore, there’s a danger in allowing the panel to linger in its present empty state, the experts said.
“It would be a real mess if CMS’ Office of the Actuary came out with a report saying IPAB was about to be triggered and there was no panel in place,” White said. “For them to do anything – to produce a high quality recommendation that the broader community buys in to – they need a couple of years to get up and running and to have concrete proposals that are workable in the real world and palatable politically.”
It’s doubtful the White House, which hasn’t nominated anyone to date, will do so before the Obama administration expires in 2016. It’s too politically fraught a battle to stake out with two critical elections in the near future.
With Medicare spending expected to remain slow for the foreseeable future, stakeholders at last have some time to figure it out.
“We have an interval here where we need to be thinking real hard on what we want from our healthcare system, and maybe we can use breathing room as a time to really think about how we can bring all the parts together to make the system work better,” Guterman said. “Despite all the rhetoric, I see an opportunity for IPAB if we can reexamine what it is and what function it needs to serve and prepare for it a more rational approach to healthcare spending in the future.”