Just Because Rep Ryan Says It, Part 2

May 24th, 2011 at 9:49 am

I riffed on the first part of this phony claim by Rep Ryan the other day–“Our plan is to give seniors the power to deny business to inefficient providers”—promising to get to the second part–“…their plan [Affordable Care Act] is to give government the power to deny care to seniors”—later.

So here goes on the “denying care to seniors” part.

The ACA does nothing of the sort.  It was structured precisely to ensure that the fundamental guarantee of Medicare remained in place.   This link, from Austin Frakt, provides the details.  The punchline is that IPAB—the Independent Payment Advisory Board created by ACA to control cost growth—is explicitly not permitted to “…ration health care, raise costs to beneficiaries, restrict benefits, or modify eligibility criteria.”

So Ryan is wrong.  Full stop.

But there’s more.  Understanding this difference provides a useful insight into how health care reform under the ACA differs from Ryan’s approach.  ACA gets under the hood of the health care delivery system to attempt to control health-care cost growth.  Ryan simply shifts cost growth from the government to seniors.

As explained in the link above, the IPAB is a mechanism to control the cost growth of Medicare, to enforce, for example, the cost effectiveness I talk about here.  I recognize that one can twist this search for more efficient health care delivery into Ryan’s accusation, but there is a fundamental difference between “denying care” and insisting on cost effective care.

There is no insurance system in the world that now or ever could provide anything and everything to everyone who wants it.  Every such system is making such decisions all the time as any self-reflection on your own plan, if you’ve got one, will tell you.  If it works, the IPAB will force the system to make better decisions.

And if you think that’s a reach, remember this: every other advanced economy spends one-half to two-thirds what we spend (as a share of GDP) on health care with similar if not superior outcomes.

The fundamental problem here is that arithmetic is unforgiving: if health care spending per person keeps growing a few percent faster than GDP per person, it means that each year we spend a larger share of our national income on health care and less on everything else.  And given that half of our health care spending is public spending, in the absence of an IPAB or similar mechanism to break this pattern, we cannot achieve a sustainable budget.

And this is by no means solely a public sector problem.  In the private-sector half of our health spending—outside of M-care and M-Caid—costs are growing even faster than on the public side.  The hope is that efficiencies IPAB identifies in the public sector bleed over (sorry…bad metaphor in this context) to the private.

So Ryan’s mantra is wrong on both the benefits of his plan and the costs of ACA, which is explicitly forbidden to “deny care to seniors.”  Otherwise, it’s fine.

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11 comments in reply to "Just Because Rep Ryan Says It, Part 2"

  1. Geoffrey Freedman says:

    What I don’t understand about all this is why we aren’t tacking the issues with our health care system first prior to tackling Medicare problem. We pay more for health care than any other developed country in the world. We like to say we have such a great system, but I beleive we are ranked 37th by the WHO and we pay costs that are two to three times per capita more than any other developed country.

    Without tackling health care first; and figuring out how can we make our health care system more efficient and keep costs more in line with what the rest of the world pays; it seems to me we are putting the proverbial cart before the horse.

    I was not aware that ACA attempted to addess some of the health care cost issues. It’s so hard to get through the political talking points and get at the real subtance of issues. Very frustrating to have to do so much research just to get at real core issues.

  2. Brett says:

    One small point: “their plan” is not the plan of some political party. It is current law.

  3. Steve Goldstraw says:

    europeans dont gorge on food then expect medicine to keep them healthy

  4. marc sobel says:

    you should also include in this argument that Medicare is more efficient and subject to lower inflation than the private market.


  5. Howard Schrader says:

    Mr. Bernstein:
    I understand the thrust of your argument, but I don’t understand the precise mechanism by which “the IPAB will force the system to make better decisions.”

    Can you elaborate on this?

    • ed says:

      I don’t think I understand either. I thought the power to deny certain types of care was the whole point, and that’s why I’ve been in favor of it. As the original post correctly points out, “no insurance system in the world that now or ever could provide anything and everything to everyone who wants it.”

      Bernstein says “there is a fundamental difference between “denying care” and insisting of cost effective care,” but he doesn’t explain what the difference is. I don’t know how you can insist on cost effective care without also denying cost ineffective care.

      • Jared Bernstein says:

        There’s a world of difference between denying “certain types of care” or treatment, as every insurance program will always do, and “denying care” writ large, which in this debate means death panels and faceless bureaucrats who stand between you and the treatment you need.

        • ed says:

          OK, so IPAB *is* allowed to “deny certain types of care.”

          It is *not* allowed to “ration health care, raise costs to beneficiaries, restrict benefits.”

          Is it just me, or does this look like a contradiction? Who is defining the meaning of words here? Does anybody know what the law actually says?

    • Jared Bernstein says:

      This is what I meant and it’s worth reading the underlying editorial.

  6. Howard Schrader says:

    I’m left with the feeling the IPAB’s actual role has not been adequately explained, and that this will create problems as the Republicans attempt to demagogue it out of existence. For example, Dr. Bernstein cites a NYT editorial which, in turn, talks about the efficacy of comparative effectiveness research, but which also notes that ACA apparently bars IPAB from using comparative effectiveness research as a basis for determining what procedures and therapies Medicare will and will not pay for. So, what else is there for IPAB to do that will actually bend the cost curve downwards?