Living in a Post-IPAB World

The second anniversary of President Obama’s Affordable Care Act (ACA) just passed. And two years after its enactment, the debate over health care reform is every bit as contentious. The recently released forecast from the Congressional Budget Office (CBO) offers fodder to both sides.

On one hand, the law may cost $50 billion less over the next ten years than projected in January — but the national budget deficit is now projected to be $93 billion higher. Medicare and Medicaid expenditures are projected to more than double over the next decade, despite 4 million fewer Americans getting health insurance.

For anyone in favor of improving our healthcare system, these numbers make clear just how desperately our county’s entitlement programs need real reform. 

Unfortunately, the president’s chosen cost-cutting strategy for Medicare — the establishment of the Independent Payment Advisory Board (IPAB), an all-powerful panel of budget enforcers — is one of the most harmful aspects of ACA. Lawmakers must cast this flawed approach to reform aside and focus instead on innovative initiatives that address the program’s real cost-drivers while protecting seniors’ access to care.

IPAB is a board of 15 presidential appointees. Unelected and unaccountable, these bureaucrats are tasked with drawing up budget cuts if Medicare expenditures exceed preset targets. 

Those targets will almost certainly be surpassed. Medicare spending is expected to be $575.7 billion this year, jumping to over $1 trillion by 2022, as the country ages. Over the next 75 years, the program is projected to accumulate a $38 trillion budget shortfall.

Much of this enormous price tag goes towards financing Medicare Parts A and B. And yet, IPAB has no authority over either. In fact, the board can’t make any substantive structural changes. Neither the fee-for-service structure nor enrollee premiums and fees can be altered.

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