June 9, 2011

IPAB: the out-of-control agency created by Obamacare (updated)

By IPAB: the out-of-control agency created by Obamacare (updated)

Author: Timothy Sandefur

Among the many Obamacare lawsuits in which PLF is participating is Coons v. Geithener, being litigated by our good friends at the Goldwater Institute, which challenges not only the constitutionality of the Individual Mandate, but also a separate provision of the law—one that creates an independent agency, almost entirely free of Congress’ control, with the power to write laws that automatically go into effect. This agency, the Independent Payment Advisory Board, or IPAB, is given sweeping powers to write “recommendations” for reducing overall Medicare expenditures…and those “recommendations” are supposed to be implemented by the Secretary of Health and Human Services automatically, without significant control by Congress. Worse still, the law tries to make it impossible for IPAB to be eliminated even by future legislation.

The statute is, of course, very complicated (no wonder members of Congress didn’t actually read it!) but here’s a simplified version.

IPAB writes “recommendations” for ways to reduce overall Medicare spending. (At least, that’s the theory; what it will actually due is not quite so clear.) Those “recommendations” are sent to the Secretary of Health and Human Services and to a couple Congressional committees. But those committees aren’t asked to pass them, or approve them; instead the committees are allowed to pass one specific type of amendment—and only that one type of amendment: that is, the Committees are allowed to add other ways of reducing Medicare expenditures that are consistent with what IPAB could have originally done, but nothing more or less. The law specifically bars Congress from considering any amendments or legislation or anything that would change those “recommendations” in any other way. And it also prohibits Congress from repealing this limit.

In other words, this independent agency writes the rules, and those rules go into effect without any significant congressional control. All Congress can do is add things that IPAB itself could have already written, but for some reason failed to. This is very different from normal administrative agencies, which write rules and then give Congress a period of time during which it can change those rules or veto them before they go into effect. Congress has no meaningful control over these “recommendations.”

It gets worse. The law tries to make IPAB basically impossible to repeal. Under a couple other sections of the law, the only way that Congress can bar these “recommendations” from becoming law after the year 2020 is if it passes a joint resolution eliminating IPAB. But that joint resolution has to be passed by a vote of 3/5 of all elected members of Congress—a supermajority requirement unlike anything ever enacted in American law, so far as I know. Even passing a treaty—which becomes the supreme law of the land—only requires 2/3 of present Senators! What’s more, Congress can only introduce such a resolution between January 3 and February 1 of 2017, and it must pass such a resolution by August 15, 2017. If it doesn’t, then Congress’ entire power to block, or even add to IPAB’s “recommendations” evaporates, and IPAB becomes a permanent lawmaking body in 2020.

I mentioned that it isn’t entirely clear what IPAB will do. That’s because the law provides that IPAB may consider any “recommendations” that are relevant to Medicare, and it requires IPAB to consider certain factors. But it’s vague about what exactly IPAB can “recommend.” For instance, the law says IPAB cannot “ration care,” but this law doesn’t provide care in the first place; it only provides insurance coverage, which, as Americans will soon learn to their detriment is not the same thing as care. This and other provisions suggest that IPAB may end up with massive power over the entire structure of health care financing—which is to say, of the entire health care market.

As with so much in Obamacare, the IPAB provision is an unprecedented attempt to expand federal power in disregard of constitutional restrictions. You can read more about it in the Weekly Standard and National Review.

Update (June 15, 2011): I've updated this post after discovering I had made two errors in interpreting the statute. First, I originally said that Congress' amendments adding further cuts to thos proposed by IPAB would not be enforced. This was incorrect; section 1395kkk(e)(3)(A)(i) does provide that Congress' substitute would become law. This substitute, however, must still comply with the same requirements IPAB's original "recommendations" must comply with, so this is still just window dressing. Second, I failed to make it clear that the resolution to discontinue IPAB must be introduced between Jan. 3 and Feb. 1 of 2017, and passed by Aug. 15 of that year. I originally suggested it could be introduced at any time before August 15, 2017. In fact, Congress' power to abolish IPAB is much more constrained than that. Thanks to PLF law clerk Jonathan Wood for catching these errors.

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