Chopin’s Sonata #2

Democrats and Republicans are joining to oppose one of the most important features of President Obama’s new deficit reduction plan, a powerful independent board that could make sweeping cuts in the growth of Medicare spending.

There is a growing move to do away with the board and that move enjoys widespread support:

Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, called it “a rationing board” and said Congress should not “delegate Medicare decision-making to 15 people appointed by the president.” He said Mr. Obama’s proposal would allow the board to “impose more price controls and more limitations on providers, which will end up cutting services to seniors.”

Here is the article (1/20).   Here is Chopin’s Sonata #2.  On the brighter side, here are outlines of a budget deal under discussion.


Suppose that this "powerful independent board" is created. What reason is there to think that Congress won't simply override it, the same way it overrides scheduled cuts in reimbursement rates in Medicare with the so-called "doctor fix"?

The point is that they don't want to be SEEN to override a panel who is restraining medical inflation and just let cost to continue to spiral out of control.

Maryland has a similar board already and it has been extremely successful in restraining cost inflation while still providing excellent health care.

There's a 60-vote requirement for overriding the IPAB's recommendations in the Senate, which isn't the case for the Medicare fee formula. The doc fix has little to do with total Medicare spending, which is dictated more by the quantity of services than the fees for individual services. Fees haven't risen very much even with the doc fixes, but total spending per beneficiary has still skyrocketed.

Look at the BRAC process to see how offloading hard decisions to an independent panel can work in practice, although I think that the health industry is a more powerful lobby than folks wanting to keep certain military bases operating.

All the 1/20 s add up ; perhaps you should switch to an x/20 notation.

Tyler, please go back to Public Choice 101. If you were a Congressman, would you be so stupid to delegate that kind of power to the President? Don't tell me that you still believe that the Fed is independent. And don't forget to read the Constitution and Posner&Vermeule's new book. Another question, do you believe that the Judiciary is independent in any meaningful sense regardless of what the Constitution says?

Barandiaran is evidently unfamiliar with the existence of the United States Department of Health & Human Services, a vast administrative body to which Congress routinely delegates tremendous power re: Medicare reimbursement.

Don't feed the trolls, Anderson

Good point.

A troll who regularly add much more than either of you ever have.

This is hilarious. E. Barandiaran a troll? Seriously????

Tom and Yancey Ward, many thanks for reading my comments.

Relax. I'm very familiar with the many times that Congress has delegated power to the President and executive agencies. There are many good and bad reasons for Congress to delegate power but a Congressman would have to be very stupid to agree without bargaining what the President asked. Journalists spend their time reporting and distorting what politicians say but I expect a Public Choice scholar to be serious about what a request to delegate power entails. In addition, since the key word is bargaining, I also expect a Game Theory scholar not to be confused by press reports of what the parties are saying.

Right. Because private insurers are not rationing boards.

They aren't in the relevant sense. You can't just call market rationing, rationing dropping the market part and then claim that because it is rationing all forms of rationing are equivalent. Importantly, they haven't wasted all their reserves on doodads when they were bringing in more than they paid out and then only once the outflow started outstripping the income they start rationing arbitrarily. The 'expert' rationing in insurance companies happens at the doctor and patient level. This has problems but different problems than a 'panel'. The reason politicians promote the idea of 'expert panels' to ration is because 'political panels' don't sound as good.

"Importantly, they haven’t wasted all their reserves on doodads when they were bringing in more than they paid out [...]"

Have you heard of AIG? Who paid for that?

"The ‘expert’ rationing in insurance companies happens at the doctor and patient level."

You've clearly never dealt with Blue Cross.

I'd also contest to what extent you can draw a line between the insurers as "market participants" and regulating bodies. They aren't exactly John Galts.

Your analogy to AIG is probably appropriate, which is why it is the exception that proves my point. I'll concede that the government is like AIG.

Neither of these things are rationing so saying one is rationing and the other isn't doesn't make much sense. Real rationing is the government saying that you can't buy something even if you can pay for it yourself because there isn't enough to go around. This is just the government saying "we won't pay for certain procedures for you." You could still purchase these things on your own if you chose to and had the resources.

If private insurers ever deny something, people sue and go to the media. Look up the history of aggressive chemotherapy.

Americans want infinite health care, whether paid for by insurance companies or by government. The expected result is exactly what we see today.

If that were the case, drug companies wouldn't set up charities offering copay support to fund expensive drugs, would they? If you look up any drug or treatment that folks complain about, say, the NHS not covering, you'll find that many or most American insurance plans won't cover the treatment (or will with copays that are out of reach for most) for exactly the same cost/benefit reasons.

"Don’t tell me that you still believe that the Fed is independent."

Considering that the Fed seems to be striving to get a Republican elected in 2012, it seems all too independent.

... For *Ryan* to be whinging about "cutting services to seniors" raises serious doubts about the existence of a vengeful God, since He would surely have struck Ryan with lightning the moment those words left Ryan's mouth.

"Considering that the Fed seems to be striving to get a Republican elected in 2012, it seems all too independent."


I suppose its singleminded obsession with nonexistent inflation, and indifference to high unemployment, is politically neutral.

"...“cutting services to seniors” raises serious doubts about the existence of a vengeful God... "

Cutting services to seniors has its risks. Cutting more services to the same seniors you convinced to vote for you by a 21% margin, by conning them into believing the Democrats were going to cut their services, will demonstrate to Ryan that taking a direct lightning strike from a vengeful God might have actually been the better choice for his political career.

I smell a bet here: Paul Ryan not re-elected in 2012 - even odds? How about it?

Think big picture. How would you categorize Ryan's career potential if his party gets wiped out in 2012 and his "loyal" GOP allies blame his policies for the debacle, even if he wins his own seat? What if Republican candidates before the election distance themselves from him in droves and throw him under the bus, as the polls increasingly reflect the shift among seniors to the left. Do you foresee him reaching his goal of being elected President in 2016, 2020, or 2024? Finally, what possible difference would it make to the odds of his success or failure if one million people on blogs bet one way or the other? A successful career is a very, very long time; and inner party loyalty is very, very fickle.

But confirms a merciful God.

Is Ryan's incentive to make the alternative to the Ryan Plan even less sustainable? Rather than wars, tax code breaks, expanding benefits, and aging population, Republicans' perception of the strength of this incentive could be the best indicator of the government's fiscal position.

How did the Republicans make "government not paying for a procedure" equivalent to "government blocking a procedure"?

In the long run Republicans are shooting themselves in the foot. They have already spent too long parroting the idea that Medicare is a right not a service that can be restricted. This kind of foolishness and rhetoric actually undermines their desire to alter the single payer model.

No, you see Ryan's plan is even better because it reduces growth rate to the rate of GDP growth instead of GDP+1. How so? Well, he's certainly not going to appoint a panel of experts to figure it out and ration services!

Similarly, Ryan's plan raises 19% GDP in revenue. How so? Well, he's not going to raise any taxes to compensate for trillions in cuts that he describes, that's for sure!

The idea that Ryan's plan is somehow detailed seems to come totally from people who haven't read it. He simply states that things will be as he thinks they should be without saying how he'd get there.

Someone as upset about the deficit as Ryan should probably try to react more constructviely to deficit-reducing moves, even if he disagrees with the particular approach used. Yes, this goes for some Dems too.

This is is most sensible comment yet, although I would modify your final sentence to read "Yes, this goes for [most] Dems too." And most Reps, for that matter.

I agree that Ryan complaining about the danger of reduced availability of treatment under Medicare is laughable.

But what, other than rhetoric, gives anyone the idea that he cares one iota about the deficit? He proposes massive cuts, and then turns around and uses the savings for tax cuts. How is that supposed to reduce the deficit?

Oh. Wait. I know. Tax fairies and unspecified other spending cuts. Ryan is a fraud, and the sooner everyone understands that the sooner we can start to have a real discussion.

He said Mr. Obama’s proposal would allow the board to “impose more price controls and more limitations on providers, which will end up cutting services to seniors.”

Well, I'm impressed by his ability to say that with a straight face. No mean feat for the author of the Incredible Shrinking Voucher Plan to accuse someone *else* of cutting services to seniors without cracking up.

I can't believe all the hysteria we had to hear about "death panels."

They are merely "rationing boards." Get with the program, people.

Yep, and the private insurance companies have been using them for decades. Besides that, they have "loophole panels", which maximize profits (or is that reduce medical care costs?) by finding creative ways to disqualify their clients when they actually need the insurance. Of course, these panels are not capable of finding the "loophole" when the client submits the original application, but only after they have paid premiums for years in the good faith they were covered.

Ideally if you were unhappy with your insurance you would be free to find another company that would provide better coverage. Not so with government programs. Of course if your goal is to get whatever medical care you want for less than it's value you're talking about charity and not being realistic regarding costs.

Also for anyone acting as if the insurance industry is currently some sort of unregulated laissez faire sector of the economy try reading some insurance laws sometime. It's basically become a de facto government mandated cartel. There hasn't been anything resembling a free market in insurance for decades.

Ideally if you were unhappy with your insurance you would be free to find another company that would provide better coverage.

Oh right. You get sick, find out your insurer won't cover some treatment, so you just go out and find a different insurer. Nothing to it.

"Ideally if you were unhappy with your insurance you would be free to find another company that would provide better coverage. Not so with government programs."

Well, the purpose of my comment was to ask if disqualifying clients when they make a claim, when it could have just as easily been done at the time of application, actually reduces "medical costs" for a private insurance company. In other words, because a government program would not presumably hire staff to specifically seek loophole disqualifications instead of paying out claims, can it be considered a legitimate "health care" cost reduction when comparing the two?

What Ryan should have said: "While I agree with the President's goal in reducing Medicare spending, I disagree with his method. My method of containing costs would be to...."

I wonder if Ryan would have been more likely to approach the issue this way if the President's speech had been more conciliatory. I do fault the President for the tone of his speech, and believe that the odds of a bargain have declined as a result.

But the Republican party can't admit to the seniors who make up a huge voting block that their method of cost reduction is to destroy Medicare and replace it with private companies.

Your comment bears a strong resemblance to Paul Ryan's comment (just from the opposite direction)

"But the Republican party can’t admit to the seniors who make up a huge voting block that their method of cost reduction is to destroy Medicare and replace it with private companies."

It's too late for that... they already have, and that genie is not going back in the lamp.

Why should he be conciliatory?

Ryan's plan is dishonest nonsense. If someone on the right wants to have a serious discussion then, yes, Obama should talk with them. But Ryan is not the guy. He's a fraud.

Besides, what are these Republicans, three-year olds? Waah, waah. Obama hurt their feelings? Too effing bad.

One should not underestimate the power of the medical industrial complex.

Now that the politicians have taught the public that "greedy" insurance companies refusing unlimited access to any and all medical procedures, costs be damned, are demons from the lower depths, how do they expect to convince the people that a government panel charged with limiting medical spending is a host of ministering angels? If Mr Obama can pull that off, he deserves a second Nobel Prize, this time for economics.

Is the Chopin meant to mark seniors who have been "rationed out" or to mark the coming death of the one element in Obamacare designed to address Medicare costs? Sly.

I read the article. One democrat, from a state with drug companies, opposed the board, and it was the democratic majority that voted in the board in the last congress, so I do not see a majority of democrats forming from that group. The bigger risk is the current republican majority abolishing the board.

As to the policy, I don't object to it.

Correction: 2 democrats, and one opposing boards.

Final point: Congress appoints commissions, like base closing commissions, to present them with up or down choices, so the criticism of some legislators that this usurps congressional power is misleading.

Those commissions have never been powerful independent boards. All elephants are not created equal.

E. If the board is not powerful, then why would someone make the effort to oppose it and defund it?

I used the same words as in Tyler's quote. I assume that the journalist intended to convey the idea that the board's powers were going to be broad. Anyway, advisory commissions may be influential but board are powerful depending on the scope of their authority.

E. I believe the boards authority is to implement. It gives Congress notice and an opportunity to cancel.

E. this is from the article: "Under the law, spending cuts recommended by the presidentially appointed panel would take effect automatically unless Congress voted to block or change them. In general, federal courts could not review actions to carry out the board’s recommendations. The impact of the board’s decisions could be magnified because private insurers often use Medicare rates as a guide or a benchmark in paying doctors, hospitals and other providers."


The Doc Fix is passed every single time the cuts are about to take effect, and they get signed by presidents of both parties. There is no reluctance in Congress to overturn the previous legislated cuts of past Congresses. I don't care how many clauses, regulations, or boards a Congress tries to impose between a future Congress and the actual cuts. This is pretty easily understandable politics.

Now, having written that, I see no reason to not try, but I wouldn't waste a single moment of effort trying to further "insulate" this board from Congress's power, nor would I waste much time writing comments trying impress others over how insulated this board will be. You will only convince children and small animals.

I guess the sonata reference was to a funeral march and to the prospects for medicare cost controls?

In fairness to Chopin and Obama, the Funeral March comprises only the third movement in Sonata #2. The opening movement is marked Grave, but is really anything but morose. And the second and fourth movements are Scherzo and Presto.

Perhaps Mahler's Kindertotenlieder would be a more apt musical accompaniment to this discussion?

Either that or AC/DC's "Highway to Hell".

The real weakness of Ryan's proposal was the lack of cutting in Medicare, today. In that regard, I think it a big error not to simply retain the Medicare cuts proposed in the ACA legislation. However, Democrats can block this added spending if they want to- the cuts are already legislated. I suspect, however, that adding the money back will be a bipartisan effort (Tyler's point, I am sure)- the Democrats only added those cuts to finesse the ACA through Congress as a paid-for bill that reduced the deficit, and I don't doubt for an instant most of them felt there would be ample opportunity to undo them once the new entitlement was passed. It only helps their cause that Republicans are equally willing to add it back. Just look at the doc fix- that should answer any questions.

It is interesting to note that Obama in his deficit speech called for increasing its powers.

Here is a little more history:
GOP leaders push to repeal Medicare cost-cutting panel
By Mike Lillis - 07/28/10 01:30 PM ET

Top Senate Republicans this week unveiled legislation to eliminate the Independent Payment Advisory Board (IPAB), the panel recently created by Democrats to fast-track Medicare cuts when spending tops pre-set limits.

The Republican critics — Sens. John Cornyn (Texas), Jon Kyl (Ariz.), Orrin Hatch (Utah), Pat Roberts (Kan.) and Tom Coburn (Okla.) — argue that “unelected, unaccountable bureaucrats” shouldn’t be granted such significant powers over the healthcare of seniors.

“America’s seniors deserve the ability to hold elected officials accountable for the decisions that affect their Medicare,” Cornyn said in a statement, “but IPAB would take that away from seniors and put power in the hands of politically-appointed Washington bureaucrats.”

Created under the Democrats’ new health reform law, the IPAB is required to make cost-cutting recommendations when per-capita Medicare spending exceeds certain levels. If Congress objects to the proposals, lawmakers must offer their own solutions yielding equivalent savings.

The IPAB panel will consist of 15 members, appointed by the White House and confirmed by the Senate. It marks the first time since Medicare’s inception that the program has faced a spending cap.

On Wednesday, outgoing White House budget chief Peter Orszag said the IPAB is among the most important of the health reform provisions for sustaining Medicare, which is projected to go broke within a decade.

“After years of going in the wrong fiscal direction, the act changes course by enacting substantial deficit reduction, reduction this administration is committed to building on,” he said.

Many provider groups have a different take — they’re leery that the IPAB’s cost-cutting options are largely limited to reductions targeting them. Indeed, the reform law prohibits the IPAB from recommending changes that would hike costs to beneficiaries, ration care, increase taxes, alter Medicare benefits or slash subsidies under the prescription drug benefit.

Alex Valadka, a Texas neurosurgeon and spokesman for the Alliance of Specialty Medicine, summarized the concerns of provider groups Wednesday, warning that provider cuts would threaten seniors’ access to care.

“Charging the IPAB — a board of unelected bureaucrats — with the task of cutting more money from an already cash-strapped system will put patients at an even higher risk of being unable to access the health care they need,” Valadka said in a statement.

The issue highlights the pickle facing Washington policymakers as they try to reduce federal deficits in the face of special interests trumpeting the importance of each dollar spent. The IPAB — like the newly created White House fiscal commission — is a not-so-tacit acknowledgement that Congress has a terrible track record when it comes to budget reform.

“Somewhere along the way toward wooing Congress,” the New York Times’s Matt Bai wrote this week, “Mr. Obama seems to have decided that the problem, at least where reducing the cost of government is concerned, is Congress itself.”

The Medicare Payment Advisory Commission (MedPAC), a panel of medical experts that, since 1997, has made non-binding cost-cutting recommendations to Congress, has seen hundreds of billions of dollars worth of proposals ignored by lawmakers over the years.

The Republicans pushing for a IPAB repeal say that’s how it should be.

“MedPAC doesn’t always get it right, and its recommendations are carefully examined by Congress before legislative action.”

I like Ryan's comment: IPAB "will end up cutting services to seniors.”

Like vouchers won't.

Comments for this post are closed