Obama’s Plan to Empower Bureaucrats to Gut Medicare Meets Bipartisan Opposition

April 19, 2011

“Unelected and Unaccountable” Bureaucrats Tasked by Obama with Gutting Medicare Draw Criticism from Unlikely Sources

A number of liberal-leaning groups usually allied with President Obama are now taking him to task for the plan he laid out in a speech last week that puts Medicare at risk by empowering bureaucrats to make arbitrary decisions about healthcare funding for seniors, all while offering no realistic path to fiscal solvency whatsoever:


LIBERAL GROUP: OBAMA MEDICARE PLAN “MORE TROUBLESOME” TO FUTURE OF MEDICARE THAN ALTERNATIVES: “ ‘If you set the cap numbers low enough, it is virtually impossible to hit those numbers without decimating pretty much every program that we care about,’ said Maria Freese, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.


“The National Committee regards Obama’s comments as even ‘more troublesome’ than the Ryan plan, Freese said, and is pivoting to focus on Medicare with letter writing, lobbying meetings, and a possible ad buy outside the Beltway.


“Also triggering alarm bells is Obama’s proposal to curb Medicare costs, which already will drop under his new health care law. The Affordable Care Act set up an independent Medicare board that will spell out cost reductions if the program grows at a rate of more than GDP per capita plus 1 percent. Last week Obama said those cuts should kick in at an even lower threshold: GDP per capita plus 0.5 percent.” (Eliza Newlin Carney, “Is Entitlement Reform the GOP’s Waterloo?”, National Journal, 4/18/2011)


DEMOCRATS CRITICIZE PLAN TO EMPOWER BUREAUCRATS TO MAKE DECISIONS FOR SENIORS ON MEDICARE: “Rep. Allyson Schwartz (D-Pa.) on Friday urged lawmakers to repeal a controversial provision of the healthcare reform law that President Obama says is central to his deficit-cutting efforts.


“Obama in his deficit speech Wednesday urged lawmakers to strengthen the law’s Independent Payment Advisory Board (IPAB), which sets Medicare cost targets and recommends payment cuts if they’re exceeded. In a “Dear Colleague” letter just two days later, Schwartz instead advocates for getting rid of the board altogether.


“ ‘While I embrace the goal of reducing costs,’ she wrote, ‘I cannot condone the implementation of a flawed policy that will risk beneficiary access to care.


“Schwartz isn’t the first Democrat to sign onto Rep. Phil Roe’s (R-Tenn.) IPAB repeal bill…But her timing and prominence — Schwartz is a healthcare reform champion and vice chairwoman of the New Democrat Coalition — makes hers the most prominent Democratic defection so far.” (Julian Pecquet, “House Democrats’ Defections Threaten Obama’s Medicare Advisory Board,” The Hill’s Healthwatch Blog, 4/15/2011)


These latest criticisms come after the AARP, The Wall Street Journal and others all detailed how Obama’s board to gut Medicare would jeopardize seniors’ benefits while turning over decisions over program funding to “unelected and unaccountable” bureaucrats as a way to “put the knife in someone else’s hand” to ration Medicare:


AARP: OBAMA MEDICARE PLAN DELEGATES TO THE “UNELECTED AND UNACCOUNTABLE,” MAY CUT BENEFITS: “We also applaud the President’s commitment to oppose plans that shift costs to seniors, but we are concerned that some provisions of his plan have the potential to break that promise.  Relying on arbitrary spending targets is not a good way to make health policy—especially when decisions may be left to the unelected and unaccountable.” (CEO A. Barry Rand, “AARP Responds to President’s Speech on Fiscal Issues,” AARP, 4/13/2011)


THE WALL STREET JOURNAL: “ALL MEDICARE DECISIONS WILL BE TURNED OVER” TO “UNELECTED COMMISSION CREATED BY OBAMACARE”: “Mr. Obama said that the typical political proposal to rationalize Medicare’s gargantuan liabilities is that it is ‘just a matter of eliminating waste and abuse.’ His own plan is to double down on the program’s price controls and central planning. All Medicare decisions will be turned over to and routed through an unelected commission created by ObamaCare—which will supposedly ferret out ‘unnecessary spending.’ Is that the same as ‘waste and abuse’?


“Fifteen members will serve on the Independent Payment Advisory Board, all appointed by the President and confirmed by the Senate. If per capita costs grow by more than GDP plus 0.5%, this board would get more power, including an automatic budget sequester to enforce its rulings. So 15 sages sitting in a room with the power of the purse will evidently find ways to control Medicare spending that no one has ever thought of before and that supposedly won’t harm seniors’ care, even as the largest cohort of the baby boom generation retires and starts to collect benefits.” (Editorial Board, “The Presidential Divider,” The Wall Street Journal, 4/14/2011)


OBAMA MEDICARE PLAN EMPOWERS “RATIONING BY BUREAUCRATS”: “It’s almost impossible to conceive of a way the president’s going to cut $2 trillion from Medicare using IPAB without the board indulging freely in heavy-handed rationing.” (Mark Hemingway, “Obama’s Medicare Plan: Rationing By Bureaucrats,” The Weekly Standard, 4/14/2011)


OBAMA MEDICARE BOARD CREATED TO “PUT THE KNIFE IN SOMEONE ELSE’S HAND” WHEN CUTTING BENEFITS: The hope is that this will free Congress to permit cuts by making it easier for them to dodge the blame. ‘Putting the knife in someone else’s hand will be a relief,’ says Robert Reischauer, director of the Urban Institute and a former director of the Congressional Budget Office. ‘It will allow Congress to rant against the cuts without actually stopping them.’” (Ezra Klein, “GOP Shortsighted in Targeting Health Care Cost Controls,” The Washington Post, 8/19/2010)


AMERICAN MEDICAL ASSOCIATION OPPOSES OBAMA MEDICARE GUTTINGBOARD: “The AMA is opposed to the current scope and authority of IPAB and the lack of flexibility in its mandate. Modification of the IPAB authority and framework is one of the highest legislative priorities for the AMA in the next session of Congress.” (“Independent Payment Advisory Board,” American Medical Association, Accessed 4/14/2011)


In the absence of more details about what Obama’s latest plan to gut Medicare entails, Americans can look to his other Medicare plan, which through his choice to do nothing leaves the program on track to cut benefits by 15 percent, according to the Obama-appointed trustees of Medicare:


MEDICARE PART A BANKRUPT BY 2029: “The HI [Hospital Insurance Trust] fund still fails the test of short-range financial adequacy, as projected annual assets drop below projected annual expenditures…by 2012. The fund also continues to fail the long range test of close actuarial balance.” (Timothy F. Geithner, Hilda L. Solis, Kathleen Sebelius, and Michael J. Astrue, “A Summary of the 2010 Annual Social Security and Medicare Trust Fund Reports,” Social Security Online, Accessed 3/15/2011)


AMERICAN ACADEMY OF ACTUARIES: 15 PERCENT CUT IN BENEFITS. “The projected HI deficit over the next 75 years is 0.66 percent of taxable payroll, down from last year’s estimate of 3.88 percent. Eliminating this deficit would require an immediate 23 percent increase in payroll taxes or an immediate 15 percent reduction in benefits—or some combination of the two. Delaying action would require more drastic tax increases or benefit reductions in the future.” (“Issue Brief: Medicare’s Financial Condition: Beyond Actuarial Balance,” American Academy of Actuaries, Nov. 2010)


23 PERCENT PAYROLL TAX HIKE AND STEEP CUTS TO BENEFITS: “Over 75 years, HI’s [the Hospital Insurance Trust Fund’s] estimated actuarial imbalance is 23 percent as large as payroll taxes, and 16 percent as large as program outlays.” (Timothy F. Geithner, Hilda L. Solis, Kathleen Sebelius, and Michael J. Astrue, “A Summary of the 2010 Annual Social Security and Medicare Trust Fund Reports,” Social Security Online, Accessed 3/15/2011)