The Future of Medicare

The Independent Payment Advisory Board (IPAB) is comprised of 15 individuals, who are experts in their field, and have been assigned by the Federal Government with the charge of managing costs associated with health care.

Beginning January 1, 2014, this board will be given the authority to recommend changes to the Medicare program if health care costs exceed the budgeted amount.  This means that IPAB’s recommendations will go into effect unless Congress can come up with alternate ways to find comparable health care savings elsewhere.

Why an Independent Payment Advisory Board?

In its current form, Medicare cannot continue to be sustained.  Medicare enrollment is expected to double over the next 30 years with the age advancement of the baby boomers.  The CBO has written that “future growth in spending per beneficiary for Medicare and Medicaid - the federal government’s major health care programs - will be the most important determinant of long-term trends in federal spending.” 

Currently, Congress makes recommendations on the management of health care costs.  It has been suggested by some that these recommendations are swayed by political votes and the special interest groups that keep politicians elected.  Therefore, an expert advisory board is required to oversee and contain costs. It is argued that IPAB will provide a neutral review process focused on maintaining a budget. 

Additional Considerations

  • IPAB board members are experts in the field of medicine and public health; Congress’ men and women are not.  Therefore, with IPAB providing recommendations, any changes to the Medicare system are being made by a respected advisory board.
  • IPAB requires Congress to find alternate savings in order to keep Medicare changes from occurring by a set deadline.  This puts pressure on Congress to find alternatives if the recommended changes are not favorable.
  • Those in favor of health care reform expect the other changes associated with it will negate the need to make changes to the Medicare system.   

Why Disapprove of the Independent Payment Advisory Board?

The largest argument against IPAB is that it will ration care.  While the bill itself specifically prohibits the rationing of health care, those who oppose IPAB take a different position.  Their contention is that the law of supply and demand requires that supply must meet demand.  And, as such, a free market will naturally meet this law.  If the market is regulated by a third party, i.e., the Federal government, it must balance this equation.  Logically, in a household budget, if expenses exceed income either the income must go up to meet expenses or the expenses must be cut.  For example, if expenses are cut, the household either gets a better rate on cable programming or channels are cut to reduce expenses.  As translated to health care, a more economical way to provide the same service is found, a service gets cut or physicians are paid less.  Thus having a trickle down effect in the market. 

If the solution is to decrease reimbursements to Medicare, physicians will look to the private market to increase reimbursements or physicians may choose to leave the field because they cannot make a living.  The effect on consumers is an increase in health care costs to supplement the decrease in Medicare reimbursements or delays in receiving care due to an increased patient load to make up for the lack of Medicare reimbursement.  Bottom line:  Supply must meet the demand.  Adding to this equation are (1) a current physician shortage already in play in the U.S., (2) Baby Boomers entering retirement age in droves, and (3) a decrease in reimbursements from Medicare leading to a physician migration away from the program.  The result?  A “perfect storm” is in the making. 

Health care reform’s intent was to provide greater access to individuals to receive health care services.  However, if those health care services are not covered by a health plan because they are NOT affordable, only those who have the ability to pay for the service outright will receive services.  Thus, those who do not have the ability to pay for these services will be at the mercy of a government-regulated plan and budget.  Therefore, contenders show that IPAB is not a solution. 

Other countries that regulate the health care market are replete with examples of services being cut in order to meet the budget.  For example, in Great Britain, the following patients are not eligible for these health care services:  heart surgery for those over 65, kidney dialysis for those over 55.

Additional Considerations

  • IPAB is not a board elected by U.S. citizens and, as a result, has no accountability to voters.  Therefore, citizens have less control over how their money is spent or saved by the government.
  • Many are concerned that IPAB will gain more and more power over time.  This brings about a more philosophical question:  Should human beings have the authority to make decisions about an individual’s health care and potentially have the ability to determine if a person will live or die?  And, is the preference that this human being is someone in a governmental office who is basically nameless and has no personal regard for the individual whose life is in his or her hands? 

Recent Legislative Action

The political winds continue to swirl around IPAB.  On March 22, 2012, the House of Representatives voted to abolish the Independent Payment Advisory Board by a vote of 223 to 181.  While this was a majority vote in the House of Representative to abolish IPAB, it is highly likely that the full Congress will not allow this to take place. 


Valid points for and against IPAB have been made.  The reality of our times is that with the advances of medicine and the increased wealth of the U.S., we gain more freedom and, correspondingly, more personal responsibility.  It is our choice to determine if it is best to abdicate this to a third party or find ways to reframe a health care system that supports personal responsibility and the freedom to make individual choices.