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Death panels version 2.1?

April 13, 2011 |  6:30 pm

Obama The deficit-reduction plan that President Obama announced Wednesday seeks to increase Medicare savings in part through a new "Partnership for Patients" that tries to reduce the illnesses that patients contract while hospitalized or undergoing surgery. It also tries to speed up the availability of generic biologic medicines and have Medicare seek lower prices for certain patients' prescription drugs. Those proposals are either noncontroversial or controversial only in the pharmaceutical industry.

The part that won't be so well received is Obama's call to expand the power wielded by the Independent Payment Advisory Board, which comprises 15 healthcare industry experts appointed by the president and three officials from the Department of Health and Human Services. The board was created by the healthcare reform law as a way to limit the growth in Medicare cost. If costs rise too quickly (see wonkier explanation below), the board must recommend ways to slow that increase, and HHS must implement them unless Congress comes up with an alternative.

According to a fact sheet released by the White House, Obama wants to lower the IPAB's cost targets to tighten the limit on spending growth. IPAB also would be allowed to consider a wider range of techniques to hold down costs while improving the quality of care.

Some critics have referred to the board -- known in Republican circles as "unelected bureaucrats" -- as a "death panel" that decides which procedures will be covered based solely on their cost. (That would be death panels version 2; version 1 was the doctors who would be allowed to bill Medicare for counseling their patients about end-of-life options.) If that were true, giving IPAB more power would be a really bad idea. But it's not.

Under the Affordable Care Act, the IPAB's proposals to Congress "shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums." Nor shall the proposals "increase Medicare beneficiary cost-sharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria." And until 2020, IPAB isn't allowed to recommend lower reimbursement rates for hospitals or hospices unless they reflect productivity improvements.

In other words, IPAB's mission isn't to decide what Medicare covers, who it covers or how much they must pay for it. It can't deny care to anybody. Instead, it's supposed to look for ways to make the delivery of care more effective and efficient -- for example, by implementing new approaches to wellness that have save money by reducing the demand for care.

The changes proposed would give IPAB a harder job, but they don't seem to change the board's basic role. The one exception would be Obama's call for letting IPAB advocate "value-based benefit designs that promote proven services like prevention," as the fact sheet put it. Translated into English, value-based benefit design means insurance plans that encourage people to take better care of themselves, detect health problems earlier, use generic drugs and see doctors whose work yields better results.

Does that sound like the work product of a death panel? I don't think so. It's a centralized approach to fighting healthcare inflation, though -- something that seems appropriate for a federal healthcare plan. Conservatives might argue that such techniques are no substitute for competition in the market, which is the thinking behind Rep. Paul Ryan's proposal for shifting Medicare from an insurance program to a voucher system. But that's a different debate entirely from the one invoked by the phrase "death panel."

(Here's a wonkier explanation I promised earlier. Under current law, the IPAB must recommend ways to reduce costs if the increase in Medicare spending per recipient grows more than the increase in per-capita GDP plus 1% -- in other words, a little bit faster than the economy as a whole -- starting in 2018. Before then, the IPAB's target is higher: the average of the general inflation rate and the inflation rate for medical costs. Obama's new proposal would lower the target to GDP plus 0.5%, although the fact sheet doesn't say when the new target would take effect.)


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-- Jon Healey

Credit: EPA / Mark Wilson

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