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January 25, 2013

Rationing by Another Name

By paying doctors less than they’re willing to accept, an unelected panel will quietly restrict medical care. By Scott W. Atlas.


Health care reform has been one of the most polarizing discussions in all of public policy. Assertions that U.S. medical care suffers from poor access and low quality compared to nationalized systems—despite often being wholly contradicted by facts in the medical journals—have been used to justify the dramatic changes to the U.S. health care system fundamental to the Affordable Care Act (ACA) of 2010.

Only after President Obama signed those changes into law did the nature of those changes become visible. While many of the law’s provisions and their implications are necessarily complex, wordsmithing by the crafters of the ACA and strident denials by its supporters have masked some of its most significant impacts.

The ACA established the Independent Payment Advisory Board (IPAB), a fifteen-member panel of unelected federal employees, its members to be appointed by the president and confirmed by the Senate. The law does not require the IPAB to be bipartisan in structure, as is required for almost all other independent agencies. Its mission is specific: to restrict payments to doctors and hospitals in order to achieve a reduction in Medicare spending beneath a specified cap.

The reality is that the IPAB represents an unprecedented shift of power from individual Americans and their families to a centralized authority, a controlling board of political appointees that is virtually unaccountable, and destined to become the American version of the NICE rationing board in Britain’s socialized medical system, the National Health Service.

But wait: supporters of the Affordable Care Act point to language in the law that explicitly prohibits “rationing.” This is what might be termed implausible deniability. Beyond the obvious problem—the absence of any definition of rationing in the law—all evidence points to the de facto rationing that will clearly result from the IPAB’s dramatic payment cuts to doctors and hospitals.

STIFLING THE COMPETITION

We know that doctors cite the money-losing reimbursement rates for government insurance as the number one reason for refusing new Medicaid and Medicare patients. We also know that even before the stipulated ACA payment cuts of 31 percent, many primary care doctors and specialists were already unwilling to accept any new Medicare and Medicaid patients. By 2019, Medicare cuts under the Obama law will be so severe that payments will become even lower than Medicaid, a system under which almost half of doctors already refuse to accept new patients.

But what about the claim by the law’s supporters that rationing by the IPAB in government insurance is no different from having private insurance, where coverage can be denied? No, it is not at all the same. When a government body or any single entity is the overwhelmingly dominant insurer for a group of people, or when such an entity is given vast and unaccountable authority over decisions, that body’s decisions to restrict care are essentially absolute. To the contrary, a private insurer has no monopoly: in a competitive environment, consumers can shop for insurance that meets their coverage needs. Just as in any other good or service, competition not only reduces prices but improves choices for individuals. The difference is that in this case, choice can save lives.

All that said, the clout of the IPAB is even broader and more nefarious than on initial consideration. Beyond overpowering authority to directly cut payments for care under Medicare, the IPAB has the power to regulate all health care in the United States, including private health care and private health insurance, so long as such action is deemed to “help reduce the growth rate [of national health expenditures] while maintaining or enhancing [Medicare] beneficiary access to quality care.” For instance, the IPAB can reduce reimbursement via private insurance down to, or even below, the reduced Medicare rates, thereby maintaining (equal) access to care for Medicare enrollees and limiting overall national spending.

Can we predict the future of the IPAB? Over a decade ago, Britain set up its National Institute for Health and Clinical Excellence (NICE), a group of appointees whose pronouncements limit medication and technology usage based on costs. Despite the endless complaints and numerous lawsuits by doctors and citizen groups in Britain, NICE served as the model upon which the IPAB was based. A board of appointees like the IPAB, NICE is meant to reduce health spending.

NICE has become a rationing board, holding costs down by limiting available treatments. Ninety percent of Britain’s hospital trusts are now rationing care by following NICE’s long list of “recommendations” that includes stopping access to drugs that prolong life or treat breast cancer, stomach cancer, kidney cancer, macular degeneration (a cause of progressive blindness), multiple myeloma, rheumatoid arthritis, early Alzheimer’s disease, MS, and osteoporosis that causes hip fractures and premature death. NICE also restricts hip and knee replacements, cataract surgery, procedures for back pain, infertility, steroid injections, and cancer screening like Pap smears.

When it comes to a health service provider, choice can save lives.

David Stout of the NHS Confederation, representing primary care trusts, explained to the BBC that “the NHS faces considerable financial pressures, and scarce resources have to be used as effectively as possible.” Under NICE, treatments are routinely refused on the grounds of limited resources and the need to make decisions based not on an individual or family’s choice, but on the government’s assessment of the benefit.

Ironically, according to its own annual reports, NICE is spending more money on propaganda about its decisions than it would have spent if it had allowed patients access to the very medicines it is denying. Britain’s Daily Mail reported that money that the institute spends on public-relations campaigns “could have paid for five thousand Alzheimer’s sufferers to get £2.50-a-day drugs for a year” or “nearly two hundred patients with advanced kidney cancer to have a drug for twelve months that would double their life expectancy.”

A COMMITMENT TO RATIONING CARE

Regardless of how strident the denials by ACA supporters, nothing was more revealing about President Obama’s true agenda than his personal choice for administrator of Medicare and Medicaid, Donald Berwick, officially appointed within a few months of the bill’s signing. Berwick proclaimed to the NHS in 2008 that individual choice is not appropriate in structuring health care—“that is for leaders to do”—as he continued, “I’m romantic about the NHS. I love it,” despite its proven inferior outcomes and scandalous limits of access to care. A year later, Berwick praised Britain’s rationing board specifically, saying that “NICE is extremely effective and a conscientious, valuable, and—importantly—knowledge-building system.” This is the same Donald Berwick who declared before his stealth appointment while Congress was in recess that “the decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open.”

Many primary care doctors are already turning away new Medicare patients.

The IPAB’s lack of accountability for such authority over the personal decisions of Americans by government appointees is unprecedented. Beginning January 15, 2014, and every year thereafter, the law requires the board to submit specific recommendations to the president and Congress to “slow the growth” in national health expenditures. However, decisions by the panel are not simply recommendations to Congress; if the Senate, the House, and the president do not concur on an alternative proposal, or if Congress does not act at all, the health and human services secretary is required to implement the board’s recommendations. The secretary’s actions are immune from any administrative modification, presidential veto, or judicial review. As of August 15, 2014, if the IPAB does not submit such recommendations and Congress does not enact its own Medicare payment restrictions, the secretary of HHS, an unelected official, is authorized to make and implement them unilaterally, that is, without any other approval.

Why the great lengths to isolate IPAB decisions from review or rejection? Apparently this was designed to isolate such decisions from political “pressures”—for example, facing the electorate in our accountable representative government. Also to be avoided: pressures that supposedly interfered with previous attempts to forcibly reduce health care costs by price fixing (see the article by Peter Orszag, former director of the Office of Management and Budget for President Obama, called “Too Much of a Good Thing: Why We Need Less Democracy,” in The New Republic, September 14, 2011).

Ultimately unaccountable and nearly omnipotent, the IPAB was called “independent in the worst sense of the word: it is independent of Congress, independent of the president, independent of the judiciary, and independent of the will of the people,” by senior attorney Diane Cohen of the Goldwater Institute, a government watchdog organization, in testimony to the House of Representatives on July 14, 2011.

Most Americans understand the reality of ObamaCare and want its repeal. It does not require a degree in economics to realize the obvious: that using an IPAB decree to reduce payment for a procedure below what a doctor would accept will severely restrict access to that care, and that the IPAB is a way of rationing care, whether or not the word “rationing” appears in the edict itself. And the attempt to justify such rationing by citing the truism that nothing is available without limits is frankly disingenuous and even offensive, a cynical argument meant to obscure what is antithetical to America’s free society: the imposition of government dictates onto the personal lives of an unwilling American public.


Scott W. Atlas is the David and Joan Traitel Senior Fellow at the Hoover Institution and senior fellow by courtesy at the Freeman Spogli Institute for International Studies at Stanford.

Atlas's research interests are domestic and global health care policy, particularly the role of government in pricing, quality, access, and innovation. He lectures throughout the world on MRI advances and key economic issues related to technology innovation. Atlas has been interviewed on television, radio, and other news media, including BBC Radio and the Lehrer News Hour, and in newspapers such as England’s Financial Times, Brazil’s Correio Braziliense, Italy’s Corriere della Sera, and Argentina’s Diario La Nacion. His most recent book, In Excellent Health: Setting the Record Straight on America’s Health Care (Hoover Institution Press, 2011), gives evidence of the high quality and access found in the US health care system relative to those of other countries and suggests free-market reforms to reduce costs and maintain quality and consumer choice. Atlas, who has received numerous awards and honors, has been a member of the Nominating Committee for the Nobel Prize in Medicine and Physiology for several years.

Atlas received his BS from the University of Illinois Urbana-Champaign and his MD from the University of Chicago.


Reprinted by permission of Forbes Media LLC © 2012. All rights reserved.