Friday, March 23, 2012

The Death Panels that Never Were

No doubt many of you have heard at least something about "death panels" with regard to Obamacare by now. No doubt many of you are also aware of the rapid growth in Medicare spending that our country is going to go through over the next several years as the baby boom generation retires. Health care costs have been and are going to continue to balloon out of control in the United States, and something must be done about this. So what can we do? Well, for starters, we can let Obamacare go into effect. The law has a number of actual cost-saving provisions in it, one of which is the Independent Payment Advisory Board, i.e. our "death panel." Contrary to what Sarah Palin would have you believe, it is not, in fact, a board of stern bureaucrats haphazardly choosing whether your grandmother may live or die.

So what is the IPAB? Well, it's a board of 15 health care experts appointed by the President and confirmed by the Senate. The experts will range from physicians to health care economists and patient advocates who are nationally recognized in their respective fields. Hardly the bureaucrats that many like to make them out to be. This board is charged with the task of controlling the growth of Medicare spending, should it cross a certain threshold. The board puts together certain recommendations for controlling costs and submits them for review to Congress. Congress then has the power to accept or reject these recommendations. If Congress rejects the recommendations, and Medicare spending crosses that threshold, Congress must either take steps to achieve equal savings or let the Secretary of Health and Human Services follow the recommendations of the IPAB. 

Now here's where the death panel thing comes in. Republicans claim that this board will lead to a rationing of care on the unfounded theory that that it would cut off access to valuable, life-saving treatments. Let me be perfectly clear: this is a lie. The law specifically states that the IPAB's recommendations for controlling costs "cannot include any recommendations to ration health care, raise revenues or Medicare beneficiary premiums, increase Medicare beneficiary cost sharing, or otherwise restrict benefits or modify eligibility criteria." So there are no death panels and Democrats aren't trying to ration out Medicare coverage. The IPAB will primarily put forth recommendations that offer long-run solutions, like incentivizing better primary care, eliminating waste, and cracking down on Medicare fraud, to name a few. The projections on how much this will save through 2021 range from $14 to $28 billion. This is a very small percentage of the total Medicare spending during that period. Some might say that this means the IPAB will be ineffective, but what you have to take into account is the fact that Medicare spending won't cross the spending threshold during this period of time, so the IPAB theoretically would have to take no cost controlling measures, but projections show that the board would attempt to cut costs regardless. Moreover, Obamacare has a number of provisions in it that reports have shown will actually produce substantial savings and control costs; the IPAB is just a backstop that supplements these measures.

The IPAB exists because it can do what politicians all too often don't have the courage or will to do. Many members of Congress are subject to the influence of lobbyists and the overall political process, which makes budgetary decision-making difficult, especially when you've got a lobbyist hounding you. The members of the board cannot be employed outside of this board, with the idea being that this will make them much less susceptible to campaign lobbying by the pharmaceutical or health care industries.

Now, some of you might ask, what's the Republican alternative to this plan? Well, it basically is the privatization and eventual dismantling of Medicare as we know it. The plan would subsidize seniors' health care and give them vouchers that are indexed to increase with either inflation or GDP growth, depending on the plan you read. The seniors are then supposed to purchase private insurance out of a number of plans, one of which would be the traditional Medicare. The difference now is that Medicare would be paid for as private insurance. 

Reports have already shown that these vouchers are found to be far too small, forcing seniors to pay up to $6,400 more in costs from day one. What's more, by 2030, these vouchers will be so inadequate that seniors will have to pay up to 68% of the cost of their medical care, compared to 25% under current Medcare law (which includes Obamacare provisions). Adding insult to injury, the report also found that compared to the cost-saving provisions found in Obamacare (those apart from the IPAB), the Paul Ryan plan for Medicare would produce very little in actual savings. Republicans like to  say that the private insurers would compete to lower the costs of insurance in a marketplace under this plan, which would lead to savings for seniors. The problem with this is that the private insurance industry already does compete, and it very clearly hasn't led to lower costs. What's more, Medicare is actually much better at holding down costs than private insurers.

So on the one hand, you have a board of experts charged with controlling long-run Medicare costs and a law that actually does control costs with guaranteed coverage for seniors, and on the other you have a voucher system that provides seniors with ever-more inadequate sums of money with which to buy insurance.