July/August 2011 Friends Like These

Buried in Obamacare is a secret weapon to contain Medicare costs. Meet the group of House Democrats who want to destroy it.

By Sebastian Jones

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.

Sebastian Jones is an editor at the Washington Monthly.


  • humanetigor on June 21, 2011 12:29 PM:

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  • Florca on June 21, 2011 2:56 PM:

    This was apparent along time ago.You guys are a little late to catch on... These guys have been on the case for months:

    ...The Obama administration’s policies, in health care as in every other sphere, are tailored to the interests and demands of the financial elite. As the Times itself all but admits in its editorial, the Obama health care plan was not a progressive reform, but the first step in an assault on social benefits. It is part of an escalating campaign to eliminate every social gain of the working class made in the 20th century, in the United States and internationally..."


  • IUPAPAW on June 21, 2011 11:52 PM:

    anyone voting against social security and medicare is not looking to be re-elected

  • Nancy Irving on June 22, 2011 3:43 AM:

    This piece is excellent.

    The GOP, with the collusion of conservative Democrats, are demagoguing IPAB by calling its mission "rationing." Rationing implies depriving people of *needed* treatments, the exact opposite of what IPAB is tasked to do, namely, to dispense with useless or harmful treatments in order to improve outcomes while addressing health care cost inflation.

    I can offer personal testimony that it is not patients who are driving the anti-IPAB story.

    I was diagnosed with cancer a few years ago. I underwent chemotherapy, radiation, hormone therapy, and, really, more than I can even remember.

    I hope that all of these treatments were effective and did me good. But all were unpleasant or exhausting, caused debilitating side-effects, and some may have permanently affected my future health.

    Believe me, if a board like IPAB had produced good empirical evidence that *any* of these treatments were ineffective, I (and I think, most patients) would have been the first to say, please don't give me this treatment. If conservatives want to call this "rationing," then, please, bring it on!

    This article is absolutely correct: conservatives in the pay of drug and device manufacturers would like us to believe that IPAB will deprive patients of needed treatment. But IPAB's mission is actually the opposite: to save patients from undergoing unnecessary and even harmful treatment.

    Thanks for pointing this out so clearly.

    P.S. Florca, why not read the article before posting. It demonstrates the exact opposite of what you seem to be saying.

  • GoozNews on June 22, 2011 5:47 PM:

    Great piece. But I would worry less about Obama losing senior votes because he vetoes an IPAB repeal bill than his signing it because he buys the basic argument: that lowering costs and ridding Medicare of wasteful tests, drugs and procedures will somehow "choke off" innovation. That's always been industry's trump card.

    The reality is just the opposite. The high prices industry charges for new technologies, whose addition to medical value almost always remains unproven, has made medicine among the least efficient industries in America.

  • IUPAPAW on June 28, 2011 4:04 PM:


  • Fred Adler on June 29, 2011 6:33 PM:

    It would be very useful if someone pointed out that with current health care costs (caused by many different reasons some popular and some not so popular) are not sustainable using taxes. And that increasing taxes on "everyone else" won't work either because with the demographic freight train bearing down on us, there just will never be enough money to pay for the level of health care "given" (they certainly used more money than they put in) to seniors during the last couple decades. There just is not enough money. Look at your SS statement some time see how much money you actually put into the system and ask yourself, how much do you think you will take out. First move, take the "special program" away for all government workers and make them use only social security and their own savings and contributions for retirement and make them use only Medicare. How can they fix the system when they don't have the incentive to fix it for themselves? Now, they just buy votes...........that is there only incentive. They call it serving their constituency but really it is buying votes. Often that is buying votes and contributions from "interested parties". Stop that now. There is not enough money. There are not enough people paying enough to maintain the current system since our parents had 3 children and we had a little more than 1. Not enough people paying it forward.

  • tom h on July 07, 2011 11:56 AM:

    It's interesting that when Michael Moore in "Sicko" attacks the mean nasty health insurance companies (non-union private employees) for denying coverage, refusing to pay for certain types of treatment etc the ins companies are the devil. When the Medicare burocracy (federal unionized workers) does the same thing it's much needed reform and it's a great thing.

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  • appletree on July 17, 2011 3:42 PM:

    Excellent article. I will make sure that Congresswoman Schwartz hears from me. Loudly.

  • a on August 03, 2011 12:30 AM:

    This article is a massive smear job. It is stuffed full of assertions about others' motives while making no attempt whatsoever to substantiate those assertions and while making no attempt whatsoever to falsify the targets' own explanations for their actions.

    As such, both the article and its author are utterly ignorable.

  • Crissa on August 08, 2011 7:43 PM:

    You ever notice how an article like this comes up, and comments (with no or little reasoning) spring up without any citations?

    Why can't medicare be supported by taxes? Demographics! ...Why, though? It's not just supported by taxes, it's supported by user-fees as well. There's no reason it can't continue to work. If you think the growth of medical costs can't be sustained... That's a different issue.

    You never see these negative comments ever wondering why people in the US pay several times more for the same services.

    And you never see these negative comments ever differentiate between paying for things which the evidence says doesn't work, vs paying for things which are cheaper now than later!

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  • GreenRaccoon on August 16, 2011 3:11 AM:

    IPAB sounds like an absolutely brilliantly crafted idea to restrain the effect of the destruction of Medicare should the cost of medicine, itself, and particularly the cost of pharmaceuticals, [hopefully] leading to the improvement of our overall patent system to reign back on the length of monopolies that were once GIVEN to them and other inventors and producers long ago when such action was still needed. Today, the long, and perhaps efforts to make it longer, have caused a problem in the cost of medical delivery in this country, not present in others, as can be seen by the greatly variant costs that are present for such care in other similar nations. Thus, I can easily see why drug lobbyists have leaned on on both their Republican and Democratic friends to disallow or, better, the deletion of the IPAB authorization article from the Affordable Care--just in case it was needed after all. Let's hope that since the matter has been brought to the attention of at least some well read Americans, our Congressmen, and hopefully President Obama
    by that time, to press hard NOT to let it be removed. Thank you Mr. President.Thanks you for such foresight.

  • Evergreen2U on August 19, 2011 5:23 PM:

    Looked up the "New Democrat Coalition" referred to in this article. Sounds like they back the neoliberalism that is subsuming democracy...money to the top crappola. Pasted from their website below:

    In March 2005, the New Democrat Coalition (NDC) in the U.S. House of Representatives was re-launched and the New Democrat Coalition PAC was established soon after. Thanks to great support in Washington and across the country, the NewDemPAC is thriving.

    NewDems have built a reputation as effective leaders on the critical issues of technology policy, economic growth, security and personal responsibility. Intent on modernizing both the Democratic party and the country, New Democrats support policies to expand economic growth and ensure that all Americans have the opportunity to benefit; a fiscally responsible and efficient government; a secure home front; and a robust foreign policy that includes trade, constructive U.S. leadership throughout the world, and a modern and strong military.

    We encourage you to help us ensure that our leaders continue to have the support they need to be a strong voice in Congress.

    Joe Crowley, NY
    Joe Crowley
    New York 7th
    NewDem Coalition Chair Ron Kind, WI
    Ron Kind
    Wisconsin 3rd
    NewDem Vice Chair Allyson Schwartz, PA
    Allyson Schwartz
    Pennsylvania 13th
    NewDem Vice Chair Jim Himes, CT
    Jim Himes
    Connecticut 4th
    NewDem Coalition Vice Chair Rick Larsen, WA
    Rick Larsen
    Washington 2nd
    NewDem Coalition Vice Chair Jason Altmire, PA
    Jason Altmire
    Pennsylvania 4th
    NewDemPAC Chair

    John Barrow, GA
    John Barrow
    Georgia 12th
    Shelly Berkley, NV
    Shelly Berkley
    Nevada 1st
    Lois Capps, CA
    Lois Capps
    California 23rd
    Russ Carnahan, MO
    Russ Carnahan
    Missouri 3rd

    John Carney, DE
    John Carney
    Delaware, At-Large
    Andre Carson, IN
    Andre Carson
    Indiana 7th
    Gerry Connolly, VA
    Gerry Connolly
    Virginia 11th
    Jim Cooper, TN
    Jim Cooper
    Tennessee 5th
    Joe Courtney, CT
    Joe Courtney
    Connecticut 2nd
    Susan Davis, CA
    Susan Davis
    California 53rd
    Eliot Engel, NY
    Eliot Engel
    New York 17th
    Gabrielle Giffords, AZ
    Gabrielle Giffords
    Arizona 8th
    Charles Gonzalez, TX
    Charles Gonzalez
    Texas 20th
    Colleen Hanabusa, HI
    Colleen Hanabusa
    Hawaii 1st
    Martin Heinrich, NM
    Martin Heinrich
    New Mexico 1st
    Brian Higgins, NY
    Brian Higgins
    New York 27th
    Rush Holt, NJ
    Rush Holt
    New Jersey 12th
    Jay Inslee, WA
    Jay Inslee
    Washington 1st
    Carolyn McCarthy, NY
    Carolyn McCarthy
    New York 4th
    Mike McIntyre, NC
    Mike McIntyre
    North Carolina 7th

    Gregory Meeks, NY
    Gregory Meeks
    New York 6th
    Jim Moran, VA
    Jim Moran
    Virginia 8th
    Chris Murphy, CT
    Chris Murphy
    Connecticut 5th
    Bill Owens, NY

    Bill Owens
    New York 23rd
    Ed Perlmutter, CO
    Ed Perlmutter
    Colorado 7th
    Gary Peters, MI
    Gary Peters
    Michigan 9th
    Pedro Pierluisi, PR
    Pedro Pierluisi
    Puerto Rico
    Jared Polis, CO
    Jared Polis
    Colorado 2nd
    Laura Richardson, CA
    Laura Richardson
    California 37th
    Cedric Richmond, LA
    Cedric Richmond
    Louisiana 2nd
    Loretta Sanchez, CA
    Loretta Sanchez
    California 47th
    Adam Schiff, CA
    Adam Schiff
    California 29th
    Kurt Schrader, OR
    Kurt Schrader
    Oregon 5th
    David Scott, GA
    David Scott
    Georgia 13th
    Terri Sewell, AL
    Terri Sewell
    Alabama 7th
    Adam Smith, WA
    Adam Smith

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