Abstract

http://ssrn.com/abstract=1987237
 


 



Bending the Health Cost Curve: The Promise and Peril of The Independent Payment Advisory
Board


J. Bradford DeLong


University of California, Berkeley; Federal Reserve Bank of San Francisco; National Bureau of Economic Research (NBER)

Ann Marie Marciarille


University of Missouri at Kansas City - School of Law

December 29, 2011


Abstract:     
Underlying today’s and the future’s health-care reform debate is a consensus that America’s health-care financing system is in a slow-moving but deep crisis: care appears substandard in comparison with other advanced industrial countries, and relative costs are exploding beyond all reasonable measures. The Obama Administration’s Patient Protection and Affordable Care Act (“ACA”) attempts to grapple with both of these problems. One of ACA’s key instrumentalities is the Independent Payment Advisory Board — the IPAB, designed to discover and authorize ways to reduce the rate of growth of Medicare and other categories of health spending. The IPAB is a peril. Expert boards to perform regulatory tasks in the interest of efficiency and social goals always run a high risk of being captured by the industry they are supposed to regulate. Even should it succeed at its task of reducing the rate of growth of Medicare spending, who is to say that the reductions will not come at a heavy cost in reduced quantity and effectiveness of medical care? But the IPAB also has promise. The need for a better process than our current specialist-driven one to assign value to the medical services provided by Medicare is great. The bellwether status of Medicare payment systems means that commercial insurance consumers and payors would also benefit mightily from bringing more coherent, technocratic, and cost effectiveness-oriented logic to this process. And the current system of relative Medicare reimbursement rates is, in the judgment of many, currently well out of whack. We quail when we consider the magnitude of the tasks the IPAB faces — even its initial task. Nevertheless, we remain optimistic that this administrative agency will manage to bend the long-run health-care cost curve and moderate future price increases.

Number of Pages in PDF File: 47

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Date posted: January 20, 2012 ; Last revised: June 6, 2012

Suggested Citation

DeLong, J. Bradford and Marciarille, Ann Marie, Bending the Health Cost Curve: The Promise and Peril of The Independent Payment Advisory Board (December 29, 2011). Available at SSRN: http://ssrn.com/abstract=1987237 or http://dx.doi.org/10.2139/ssrn.1987237

Contact Information

James Bradford DeLong (Contact Author)
University of California, Berkeley ( email )
Department of Economics
#3880
Berkeley, CA 94720-3880
United States
(510) 643-4027 (Phone)
(510) 642-6615 (Fax)
Federal Reserve Bank of San Francisco
101 Market Street
San Francisco, CA 94105
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Ann Marie Marciarille
University of Missouri at Kansas City - School of Law ( email )
5100 Rockhill Road
Kansas City, MO 64110-2499
United States
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