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

See all articles by J. Bradford DeLong

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

Multiple version iconThere are 2 versions of this paper

Date Written: December 31, 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 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

DeLong, James Bradford and Marciarille, Ann Marie, Bending the Health Cost Curve: The Promise and Peril of the Independent Payment Advisory Board (December 31, 2011). Health Matrix: Journal of Law-Medicine, Vol. 22, No. 74, 2012, Available at SSRN: https://ssrn.com/abstract=1983721 or http://dx.doi.org/10.2139/ssrn.1983721

James Bradford DeLong

University of California, Berkeley ( email )

Department of Economics
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Federal Reserve Bank of San Francisco

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National Bureau of Economic Research (NBER)

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Ann Marie Marciarille (Contact Author)

University of Missouri at Kansas City - School of Law ( email )

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