Buried in Obamacare is a secret weapon to contain Medicare costs. Meet the group of House Democrats who want to destroy it.
Photo: 2007, the Nasdaq Stock Market, Inc.
When Wisconsin Representative Paul Ryan let loose the bombshell of his Republican budget proposal in early April, the pressure in Washington immediately began to mount for President Obama to come back with a response. Hailed as a “bold” and “courageous” attempt to reckon with the mounting deficit, Ryan’s plan scored instant points for its willingness to grapple with Medicare, the greatest long-term driver of government deficits and debt. Of course, behind the much-hyped “boldness” came an all-too-familiar Republican attack on a government program. Ryan proposed phasing out Medicare and replacing it with a privatized system of vouchers that would, according to the Congressional Budget Office, have seniors paying two-thirds the cost of their care, while also cutting taxes on the wealthy and repealing the Affordable Care Act of 2010. But a gauntlet had been thrown down: Obama would have to come forward with a better idea.
And so the president did, in a widely watched speech eight days later at George Washington University. With Ryan himself sitting in the front row, Obama excoriated the Republican’s proposal and offered a full-throated defense of programs like Medicare, Medicaid, and the social safety net as a whole.“We’re a better country because of these commitments,” Obama said. “I’ll go further—we would not be a great country without those commitments.”
When it came time to offer his substantive answer to Ryan and the deficit, Obama pointed to the Affordable Care Act itself, whose reforms, he reminded the crowd, were projected to save the federal government $1 trillion on their own. Then, as a new deficit-control measure, Obama proposed expanding the powers of a crucial but little-understood entity established by the health care bill. “We will slow the growth of Medicare costs,” Obama said, “by strengthening an independent commission of doctors, nurses, medical experts, and consumers who will look at all the evidence and recommend the best ways to reduce unnecessary spending while protecting access to the services that seniors need.” He was referring to something called the Independent Payment Advisory Board, or IPAB.
In the days that followed, while the left mainly cheered at Obama’s philosophical defense of the welfare state, the right zeroed in on the president’s call for a stronger IPAB. The National Review flamed the forgettable-sounding board as “the real death panel, the true seat of rationing, and the royal road to health-care socialism.” (For good measure, the magazine ran a cover image depicting the commission as a ghoulish crowd of Grim Reapers.) As it happened, the Republicans had been gunning for IPAB for quite some time. Legislation to kill the independent panel was put forward as early as July 2010 in the Senate, and this January, Tennessee Tea Partier Phil Roe introduced a bill to repeal it in the newly Republican House. Now, by emphasizing its importance, Obama had put IPAB back at the front of the conservative firing line.
The fallout had all the markings of a straightforward partisan battle—a reflexive attack on faceless bureaucrats tailor-made for the Tea Party era. But then, just two days after Obama’s speech at George Washington, a little-known Democratic congresswoman named Allyson Schwartz signed on as a cosponsor of Roe’s bill. Her defection was enough of a partisan hiccup to earn some prominent ink in the Beltway press. An article that landed on the cover of the New York Times in mid-April suggested that conscientious opposition to IPAB was becoming an issue that crossed the political aisle.
What Schwartz’s defection really represented, however, was not the MacGuffin of earnest bipartisanship but a serious moment of escalation in a war that the medical industry is waging against the lynchpin of President Obama’s health care reforms. To understand why, it helps to know a little bit about Schwartz and who she represents. A former health care executive from a suburban district outside Philadelphia, she is the health policy brains of the New Democrat Coalition, a group of forty-two House members whose close relationship with several hundred Washington lobbyists has made them one of the most successful political money machines since the Republican K Street Project collapsed in 2007. In the past several years, they have played an instrumental role in helping the financial and health care industries limit and weaken proposed reforms; IPAB would appear to be their next target. And if the history of the group is any indication, where Schwartz goes, the votes of a substantial number of her New Democrat colleagues are liable to follow.
Likewise, to understand why so many forces are amassing against IPAB, it helps to know what it represents: namely, our best hope not only of reining in Medicare costs and hence future budget deficits, but also of reforming the exorbitant, entrenched, ineffective practice of American medicine itself.
Since Medicare was signed into law in 1965, oversight and administration of the program has fallen to the Centers for Medicare & Medicaid Services. However, the CMS has consistently been hampered by Congress, which, through both subtle and direct means, has placed itself at the center of Medicare’s affairs, dictating terms and blocking reforms.
If the CMS has been answerable in great detail to Congress, it is important to remember that Congress has been, and still is, heavily answerable to the health care industry. For members sitting on committees that deal with Medicare, health care companies and trade groups have provided a steady stream of industry-sponsored studies and campaign contributions in the hope—usually fulfilled—that lawmakers will take their side. To help counter this influence, congressional budget hawks in 1997 created the Medicare Payment Advisory Board to give lawmakers independent expert advice. Med-PAC has since produced scores of recommendations for lowering costs—suggesting, for instance, that the CMS agree to pay the lowest price among different products designed for treating knee osteoarthritis, all of which work more or less the same way, rather than the average price of those products (likely savings: $500 million over ten years). But such recommendations are only advisory. Lawmakers are free to ignore them, and under pressure from, say, medical device makers, they usually do.
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