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IPAB's seven deadliest sins

This week, the House voted to repeal ObamaCare’s infamous “death panel,” officially known as the more polite-sounding Independent Payment Advisory Board, or IPAB. But whatever you call it, it should be repealed. Here's why.

Created in the 2010 health care law, this powerful, 15-member government board is charged with implementing $500 billion in Medicare cuts over the coming decade. The resultant savings will be used to help pay for President Obama’s new health care entitlement, which the Congressional Budget Office recently said will cost significantly more than originally projected.

Savings are needed in Medicare, to be sure. At $600 billion a year, it’s the nation’s second largest government program, and at 7 percent a year the fastest-growing. Designed in the 1960s, it’s out-of-date, fraud-ridden, and overgrown with bureaucratic red tape and price controls. In a word, it’s ripe for reform. But IPAB is a truly misguided way to fix it.

Here’s how the panel—brainchild of progressive Sen. Jay Rockefeller, West Virginia Democrat—is supposed to work. Beginning next year, if Medicare’s growth rate is projected to exceed a “global budget” target defined in the 2010 law, then the 15 “experts” at IPAB must develop a proposal to get Medicare spending back in line. If the Secretary of Health and Human Services decides she doesn’t like the proposal, she can substitute her own. But either way, the decision, once published, goes into effect automatically—and basically can’t be reversed.

This may not be a “death panel,” but it is a legal and moral monstrosity. Here, in my opinion, are its “seven deadliest sins.”

1. It will hurt patients. IPAB’s job is to find savings, but it’s barred from implementing or even proposing reforms that would change how the massive Medicare program works. Instead, it’s been given a single tool, a chainsaw. It can only cut reimbursements for doctors and hospitals. If cuts of this sort are allowed to take effect, it will inevitably lead to rationing and care-denials, because Medicare reimbursement rates are already low and cutting them further will force many providers to stop accepting Medicare patients. This could be especially bad for rural and disabled patients.

2. It will hurt doctors and hospitals. The cuts will, in effect, force health care providers to choose between seeing fewer Medicare patients and going bankrupt. Some providers will do both. Right after ObamaCare passed, the top numbers-cruncher at Medicare estimated that IPAB’s 10-year cuts will put 15 percent of America’s hospitals out of business

3. It’s undemocratic. The panel’s decisions carry the force of law, unless two-thirds of each house of Congress votes to stop them—a high bar—and are not permitted to be reviewed by any court.

4. It’s unaccountable. IPAB is exempt from the “sunshine” laws that apply to virtually every other board and commission. It doesn’t have to hold public meetings, consider public input on its proposals, or even make transcripts of its deliberations publically available. Meanwhile, it “may accept, use, and dispose of gifts or donations of services or property,” providing a not-so-subtle invitation to health-industry lobbyists to lavish board members with favors and goodies in hopes of influencing their decisions.

5. It’s corruption-prone. IPAB “may accept, use, and dispose of gifts or donations of services or property”—a not-so-subtle invitation to health-industry lobbyists to lavish board members with favors and goodies in hopes of influencing their decisions.

6. Its budget is shielded from congressional scrutiny. IPAB’s annual operating budget is exempt from annual congressional budgetary review like other agencies. Instead, its funding is on auto-pilot, drawn directly out of the Medicare trust funds. Incidentally, a job at IPAB is nice work, if you can get it. Salaries start at $165,300 for the board members, $179,700 for the chairman, and up to $145,700 per employee—plus travel and expenses.

7. It’s unconstitutional. IPAB is an “unconstitutional trifecta”: an executive agency wielding legislative power that's immune to judicial oversight. In effect, it is the sole judge of the laws that it creates and executes. Such an accumulation of powers would have horrified our Founding Fathers, who believed, as Madison put it in "Federalist 47," that “The accumulation of all powers, legislative, executive, and judiciary, in the same hands … may justly be pronounced the very definition of tyranny.”

This is nuts.

Happily, there’s a better way: Let markets work, by giving patients more choice and control. For example, an ingenious new bill by Sen. Rand Paul, the liberty-minded Republican from Kentucky, would simply let Medicare seniors opt into their own member of Congress’s health plan. If all seniors took the offer, according to the senator’s office, it would save taxpayers $1 trillion over the coming decade.

Think about that. Freedom saves twice as much money as bureaucracy—and with 100 percent less rationing.

Dean Clancy, a former senior White House budget official, heads up the fight for patient-centered health care at FreedomWorks, a national grassroots organization working for lower taxes, less government, and more freedom.