How IPAB could become a non-issue

at 01:42 PM ET, 03/09/2012


(Christopher Furlong - Getty Images)
One of the top Republican targets for repeal in the health reform law is the Independent Payment Advisory Board (IPAB), a 15-member board that will tell Congress how to slow Medicare cost growth, starting in 2014. Congress must adopt these recommendations — or come up with its own savings.

To date, IPAB has been a contentious issue. Republicans in the House want it repealed, and the White House has resisted. But if the growth in Medicare costs continues to slow, as has been happening lately, it could end the fight over IPAB altogether.

A bit of background on how the IPAB works is helpful here. For the board to even make recommendations, Medicare spending has to hit a trigger. Starting in 2018, it has to be growing faster than gross domestic product plus 1 percent. If health-care costs are growing slower, the IPAB does not make recommendations, and 15 board members end up with some time on their hands.

For a while, keeping Medicare cost growth to GDP plus 1 percent was thought to be absurd. Medicare cost growth vastly outstripped the rest of the economy. But, a few years ago, that started changing: Health-care cost growth came pretty much in line with other sectors. Over the past two years, in fact, health-care costs have grown more slowly than any other point in the past five decades. They rose 3.8 percent in 2009 and 3.9 percent in 2010. In 2010, GDP grew at 4.2 percent.

“I see so many words written about the IPAB as cost control when it may very well never be triggered, and become completely irrelevant,” says Chapin White, a senior health-care researcher at the Center for Studying Health System Change.

The outstanding question is whether the health-care cost slowdown that would diffuse IPAB is a permanent or a temporary one. White recently wrote a paper in the New England Journal of Medicine arguing for the former, that a number of changes in Medicare reimbursement are reducing how much we spend on each beneficiary. Others, however, think the slowdown is a product of seniors having less to spend on their health care in the recession, and that growth will rebound as the economy grows. And if that happens, that could leave the IPAB very much alive and well in the coming years.

 
Read what others are saying

    Most Read: Business

    DJIA
    0.09%
    S&P 500
    0.00%
    NASDAQ
    -0.02%
     Last Update: 10:13 PM 08/27/2014

    World Markets from      

     

    Other Market Data from      

     

    Key Rates from