Opinion: ‘Obamacare’ and the rationing myth

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As part of their ongoing efforts to dismantle ‘Obamacare,’ a.k.a. the Patient Protection and Affordable Care Act, House Republicans are set to vote Thursday on a bill to repeal one of the law’s main cost-control features: the Independent Payment Advisory Board, the panel of experts tasked with keeping a lid on rising Medicare costs. But the IPAB is just a more explicit -- and probably less onerous -- way to do something House Budget Committee Chairman Paul Ryan (R-Wis.) proposes in his own Medicare overhaul.

The 2010 law includes a wide variety of initiatives and experiments aimed at reining in the cost of medical care. The IPAB, whose 15 members are appointed by the president with the Senate’s approval, is essentially a backstop in case those efforts don’t pan out. The board’s job is to recommend cost-cutting measures each year that Medicare spending is projected to grow faster than the law’s targets, starting in 2014. Those recommendations go into effect automatically unless Congress approves an alternative way to achieve the same savings.


The fiscal year 2013 budget resolution that Ryan unveiled Tuesday requires Medicare spending to increase no more than half a percentage point more than GDP starting in 2023. That’s a tighter cap than the healthcare law sets with its spending targets. And unlike the healthcare reform law, Ryan’s budget plan offers only one significant mechanism for holding down Medicare costs: an insurance-buying exchange where the elderly can shop for subsidized coverage from private insurers. The bill the House is voting on Thursday, HR 5, would provide another: strict limits on medical malpractice claims.

If competition and tort reform don’t slow the rapid growth of treatment costs, they won’t make much of a dent in Medicare spending. At that point, someone (Ryan’s proposal doesn’t specify who) will have to cut something (the proposal doesn’t specify what) to keep Medicare within the limits the Ryan budget would set.

The ‘Path to Prosperity’ report that Ryan issued Tuesday implies that the premium subsidies would be spared the axe because they would always be large enough to cover the cost of the second-least-expensive insurance plan in the new Medicare exchange. That exclusion would leave payments to doctors, clinics, hospitals, nursing homes and other providers the most likely targets.

At a hearing Wednesday, however, the Budget Committee’s GOP staff director, Austin Smythe, said that the premium subsidies would, in fact, be on the chopping block if costs rose faster than GDP plus 0.5%. That would change the nature of Medicare, ending its longstanding guarantee of affordable health insurance for seniors. The more costs grew above the cap, the less affordable the insurance would be for the millions of seniors on tight budgets.

That’s as alarming as the rationing that Ryan says the IPAB would do. Except that it wouldn’t. According to a white paper by the Kaiser Family Foundation, the healthcare reform law forbids the board from making recommendations that would ‘(1) ration healthcare; (2) raise revenues or increase Medicare beneficiary premiums or cost sharing; or (3) otherwise restrict benefits or modify eligibility criteria.’

The law also takes fees for many in-patient and hospice services off the table until 2020, and shields reimbursements for clinical laboratories until 2016. That leaves payments to physicians as the most obvious target, which is why the American Medical Assn. supports repealing the IPAB.

The intent of the measure, though, is to have experts look at the efforts going on across the country to make healthcare more efficient and effective, then apply those lessons to Medicare. That might include new ways to deter fraud, make better use of nurses and physicians’ assistants or keep patients with chronic ailments out of emergency rooms and nursing homes.

Granted, there’s some mystery about what the IPAB would do if it had to restrain Medicare spending. But at least it’s clear what the board couldn’t do, and who would be making the decision. You can’t say that for the Ryan plan.


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