No, Howard Dean, Obamacare doesn’t ration Medicare

Republicans have said hyperbolic things about the 2010 healthcare law’s Independent Payment Advisory Board so many times -- e.g., former Alaska Gov. Sarah Palin’s declaration that it’s a “death panel” -- that I’ve gotten inured to it. Nevertheless, it was a little startling to see some of the same facts-be-damned assertions coming from a liberal Democrat on the op-ed page of the Wall Street Journal.

Former Democratic Party Chairman Howard Dean took to the Journal on Monday to attack the IPAB with the same blatant mischaracterizations that have been the hallmarks of the GOP attacks. The only real difference is that Dean did so after saying there was “much to applaud” in the 2010 law, including its (extremely expensive) push for universal health insurance coverage.

“The IPAB is essentially a healthcare rationing body,” Dean blithely writes, despite the fact that the law flatly states the board cannot ration care. Specifically, any proposal the board makes to control Medicare’s costs per beneficiary “shall not include any recommendation to ration healthcare, raise revenues or Medicare beneficiary premiums under section 1395i–2, 1395i–2a, or 1395r of this title, increase Medicare beneficiary cost-sharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria.”

And while IPAB is expected to make recommendations every two years on how to slow the growth in healthcare costs across the industry, its authority to propose specific changes is limited to Medicare.

Dean goes on to say that IPAB will set reimbursement rates for Medicare doctors and “determine which procedures and drugs will be covered at what price.”

But he’s confusing the new board with mechanisms that already exist in Medicare to determine what’s “medically reasonable and necessary” (a criteria for reimbursement) and what the government will pay for it. IPAB will be able to propose changes in the rate of growth for Medicare fees -- for doctors at first, and later for hospitals as well. It can also call for changes in the subsidies for Medicare Advantage plans and in the way Medicare calculates the proper price to pay for drugs. But as noted above, it can’t restrict benefits or ration care.

The most remarkable -- and remarkably false -- critique in Dean’s piece is the statement that the Congressional Budget Office has projected that the IPAB “won’t save a single dime before 2021.” That’s because the CBO projects that Medicare costs per beneficiary will rise so slowly over the coming decade, they won’t reach the threshold set in the law for the IPAB to act. It’s not that the board will be ineffective, as Dean implies. It’s that it won’t be activated.

In the minds of Dean and other critics, the board has only one tool to control costs: set artificially low prices for medical care. And if that’s all it does, I agree with Dean that it won’t be effective. Price controls don’t work very well in any context.

But that’s not what the IPAB was created to do. It was designed to push systemic changes in Medicare, speeding the transformation from an inefficient system with misplaced incentives to one that rewards prevention and high-quality care. There’s no clear way to do that, at least not today, but at the very least it means ending the fee-for-service approach that encourages providers to give more treatment to sicker patients, rather than keeping their customers healthy in the first place.

Like so many things about the 2010 Patient Protection and Affordable Care Act, the IPAB has been wildly mischaracterized and misunderstood. Sadly, the mischaracterizations just keep coming, no matter how many times they’re rebutted.

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