No Warm Welcome For IPAB in the Golden State

No Warm Welcome For IPAB in the Golden State

By John Kehoe

As the Baby Boom generation marches toward retirement, keeping Medicare’s costs under control is more critical now than ever. This is particularly important to California, whose 4.7 million Medicare beneficiaries account for 10 percent of Medicare’s total enrollment. It’s little wonder that the uncertainty surrounding Medicare's future has California's aging community on edge.

Unfortunately, between President Obama's in-progress overhaul of the healthcare program and Rep. Paul Ryan's, R-Wisc., proposed Medicare reforms, there is good reason for this concern.

Of all the possible reforms, however, one is more controversial than the rest: the Independent Payment Advisory Board, or IPAB, which was included in the health reform law President Obama signed last March as a way to keep Medicare costs under control.

Here’s how IPAB would work: Beginning in 2014, 15 presidential appointees would be charged with keeping Medicare spending in line with specific spending targets. If Medicare’s costs threaten to go above these targets, IPAB would intervene with recommendations to control spending.

Once IPAB submits its cost-cutting ideas to Congress, the House and Senate would have just four months to either accept the recommendations -- in total, not separately -- or come up with their own package of cuts that hits the same spending target. The only way Congress could waive this restriction would be with a three-fifths supermajority, an almost unheard of feat for an issue as divisive as health care reform.

If Congress can't reach a decision in that brief time window -- or its recommendations don't meet all the law’s specified requirements -- IPAB's proposals automatically become law.

This means 15 unelected appointees will make decisions that directly affect access to health care -- not just for the 4.7 million Californians on Medicare, but for all 47 million seniors across the country.

And this could happen every single year.

Still, IPAB won't have unlimited authority. It can’t touch anything related to Medicare benefits, premiums, co-pays and eligibility. But that means IPAB will have to restrict its cost cutting efforts almost exclusively to provider payment rates.

The problem is that Medicare payments are already so low that many doctors lose money when they agree to treat Medicare patients.

And for years, Medicare’s low provider rates in California, as well as many other states, have meant fewer providers. Even without additional IPAB cuts, almost a third of primary care physicians have capped the number of Medicare patients they will accept, according to one survey. Another survey found that 13% of family physicians have opted out of Medicare altogether. If IPAB pushes rates further down, more doctors are sure to follow suit.

Fewer doctors treating Medicare patients means reduced access for patients. Seniors will have to travel greater distances to find care, wait in longer lines at doctors' offices, or go without care altogether. IPAB’s backers say that the board is specifically banned from rationing care, but for seniors unable to find a doctor, the results could very well be the same.

In California, where the 65-and-over population is projected to grow twice as fast as the national average, that scenario isn't just serious, it's downright dangerous.

And while supporters of IPAB claim that the new board will have a significant impact on reducing Medicare spending, a Congressional Budget Office report found that IPAB wouldn’t have an effect on spending until about 2021.

Rep. Allyson Schwartz (D-Pa.) rightly says, “The threat of reduced payments is the least imaginative option and most unlikely to result in the kind of heath care we know seniors and all Americans deserve. We have a choice: Reduce costs through improved delivery of care or simply leave it to this new board to cut payments. I am opposed to the board because we have the knowledge and the will to achieve cost savings in Medicare the right way.”

When there is so much at risk for so many people, it makes neither common nor financial sense to support IPAB

There is a better way -- focus on wasteful Medicare procedures.

As University of California, San Francisco, medical professor and cardiologist Dr. Rita Redberg recently pointed out, wasteful procedures costs Medicare a stunning $150 billion each year -- from $1 billion spent on ineffective vertebral to thousands of needless cardiac stent implants. Medicare's current chief actuary, Richard Foster, estimates that up to 30 percent of all health care expenditures are unnecessary.

Cutting unnecessary expenses represents a much more realistic, effective and far less risky means for reducing the Medicare’s spending than anything the IPAB could accomplish.

John Kehoe is a founding board member of CALSAL and the former executive director of the California Commission on Aging under Governors Wilson and Davis. Kehoe also served as Secretary of the California Consumer Affairs Department under then Governor Ronald Reagan. He is CALSAL's Secretary, the Director of Council of Policy Advisors and serves as CALSAL's spokesperson.

##