Bending the Health Cost Curve: The Promise and Peril of the Independent Payment Advisory Board
47 Pages Posted: 13 Jan 2012 Last revised: 5 Jun 2012
Date Written: December 31, 2011
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 Administrations' Patient Protection and Affordable Care Act (ACA) attempts to grapple with both of these problems. One of the 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. Even should it succeed at its task, who is to say 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.
Keywords: health care, IPAB, cost control, Medicare, independent payment advisory board
JEL Classification: I18, K23, A12, A13, D40, G18, H11, H51, H62
Suggested Citation: Suggested Citation