Suppose Congress asked Americans: which government officials should decide what foods you would be allowed to eat and what prices you had to pay at the grocery store – Congress, or an unelected board of nutritional experts appointed by the president?
Most Americans would immediately reply, “Neither!” But that’s precisely the debate between Congress and the White House regarding President Obama’s proposed Medicare Independent Payment Advisory Board.
One of President Obama’s key proposals to reduce skyrocketing Medicare costs is a so-called Independent Payment Advisory Board (IPAB). The IPAB would consist of 15 members appointed by the president (and confirmed by the Senate), empowered to decide what medical tests and procedures Medicare would cover and how much it would pay providers.
As the Wall Street Journal notes, the IPAB’s decisions wouldn’t be subject to judicial or administrative review. They would go to Congress for an up-or-down vote, and would go into effect unless Congress adopted its own plan to reduce Medicare spending by an equivalent amount.
Supporters of the IPAB liken it to the Clinton-era independent Base Realignment and Closure Commission to reduce military spending free from political pressures from influential congressmen seeking to keep their own home district military bases open.
However, giving this power to the IPAB would put tremendous medical decision-making in the hands of unelected officials with minimal accountability. We’ve already seen a foretaste of this when a federal government medical panel attempted to save money by restricting screening mammography to women over age 50, even though decades of medical research has shown clear benefits to starting annual mammograms at age 40. Although the Obama administration stated that the IPAB would not ration medical care, its power to set payments to doctors and hospitals would give it de facto rationing power.
If the IPAB sets the reimbursement rate for services below the cost of providing it, then hospitals and doctors could no longer afford to offer such services — even if the services are medically best for their patients. Life-saving medical procedures we currently take for granted, such as PET scans to detect early cancers or minimally invasive methods to safely open up blocked vital blood vessels without risky surgery, might no longer be available. Although those services might still theoretically be “covered” by Medicare, in practice doctors would no longer offer them, and their patients would no longer be able to receive them.
Interestingly enough, President Obama’s proposal has aroused strong opposition from both Congressional Democrats and Republicans. But much of this opposition is based not on a principled defense of medical freedom for patients and doctors, but rather on Congress’ desire to retain for itself the power to decide what services should (or should not) be covered under Medicare.
If Congress makes Medicare coverage decisions, these decisions will be inevitably corrupted by special interest politics. We’ve already seen this in Massachusetts, where political pressure groups have engaged in ferocious lobbying to make sure their pet benefits are included in the government-controlled insurance plans that all residents must purchase. Since 2006, special interest groups have successfully lobbied to include 16 new benefits in the mandatory insurance package (including lay midwives, orthotics, and drug-abuse treatment), and the state legislature is considering dozens more. Such special-interest lobbying would merely expand to the national level if Congress is allowed to determine Medicare coverage decisions.
The fundamental problem is that Americans are being offered a false choice: “Which government officials should control what services Medicare patients can receive: a panel of unelected, unaccountable bureaucrats or elected politicians subject to ever-shifting special interest politics?”
Of course the correct answer is: “Neither.” Medical decisions should be made by patients and doctors, not by government officials. Similarly, financial coverage decisions for tests and procedures should be left to patients, providers, and insurers to determine in a free market.
Not to government central planners.
If the health insurance market were fully free (which it currently is not), insurers would be able to offer a wide range of packages varying from low-cost “catastrophic only” plans to expensive “gold-plated” plans that covered experimental treatments for every rare disease, and everything in-between. Similarly, patients would be free to decide whether they wanted to pay higher premiums while still healthy for guaranteed access to unusual expensive treatments if they needed it later, or if they’d rather save that money for more important life priorities (such as buying a new house or saving for their children’s education) in exchange for forgoing such costly end-of-life care that might only gain them a few additional weeks of life.
In a fully free market for health insurance, everyone would be free to purchase whatever level of coverage they desired according to their best rational judgment from any willing insurer. This would allow them to join voluntary insurance risk pools with others with similar preferences without imposing their choices on others with different priorities. Individuals have the right — and the responsibility –to make these important life decisions for themselves. The government should not be making these decisions for us.
Furthermore, in a fully free market the price of advanced medical technology would quickly fall over time, just as it has with consumer technologies like cellphones and computers and with advanced medical services in the least regulated (i.e., most free) sectors of medicine such as LASIK eye surgery. This is the natural outcome of a free market, where producers survive by competing to offer consumers the best value for their money. If Americans want to guarantee long-term access to affordable life-saving medical technology, the answer is not to create government agencies like IPAB to set prices by fiat (ala the old USSR-style centrally planned economies).
The government should get out of the way and leave consumers, insurers, and providers free to seek their rational self-interest in a free market.
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