Premium Support and IPAB: Why Not Both?

Blog Post
Saturday, August 11, 2012


This commentary originally appeared on The Concord Square May 31, 2011

As a matter of controlling Medicare costs, I find myself liking a bit of Rep. Paul Ryan’s approach and a bit of President Obama’s. Too bad the political climate is such that Democrats and Republicans don’t seem willing to acknowledge that the other might just have a good idea.

In Ryan’s favor, I think the premium support model holds out the best hope for reining in cost growth. It would allow us to set a Medicare “budget” and create incentives for a more efficient system. Without a budget, I worry that efficiencies found in the pilot programs and demonstration projects enacted last year will not be translated into real savings. Of course for premium support to work, the level of support and growth rate have to be realistic. In this regard, I’m with those who think that Ryan’s plan misses the mark. However, the concept should not be rejected just because the details are flawed.

Even if we move toward premium support, we should have a back-up mechanism to ensure that targets are met and that quality of care is improving. President Obama’s suggestion to strengthen the Independent Payment Advisory Board (IPAB) would fill this role. It’s pretty clear that politicians are not the best at cutting health care costs. If they were, we wouldn’t be in the mess we’re in. The IPAB would not deprive Congress of its role in setting the rules for Medicare, but it would be there to implement cost cutting strategies if Congress fails to act.

Premium support and IPAB are not mutually exclusive. While they are not magic bullets, something doesn’t need to be a magic bullet to be a good idea. And when it comes to controlling health care costs, we need all the good ideas we can get -- no matter whose idea it is.