The Independent Payment Advisory Board — Congress’s “Good Deed”

Henry J. Aaron
Henry J. Aaron The Bruce and Virginia MacLaury Chair, Senior Fellow Emeritus - Economic Studies

May 11, 2011

Among the most important attributes of legislative
statesmanship is self-abnegation — the
willingness of legislators to abstain from meddling
in matters they are poorly equipped to manage.

The law creating the Federal Reserve
embodied that virtue. Congress
recognized the abiding
temptation to use monetary policy
for political ends and realized
that it would, at times, prove irresistible.
To save themselves from
themselves, wise legislators created
an organization whose funding
and operations were largely
beyond the reach of normal legislative
controls. Short of repealing
the law, Congress denied itself
the power to do more than
kibbitz about monetary policy.

In establishing the Independent
Payment Advisory Board
(IPAB) in section 3403 of the Affordable
Care Act (ACA), Congress
may once again have shown such
statesmanship. For several reasons,
however, it is too early to
be sure. The board must surmount
major challenges — first to survive
and then to function effectively.
Harold Pollack has neatly
summarized the problem, the solution,
and the problem with that
solution: “Every Democratic and
Republican policy expert knows
that we must reduce congressional
micromanagement of Medicare
policy. Unfortunately, every Democratic
and Republican legislator
knows that mechanisms such as
IPAB that might do so would
thereby constrain their own individual

Medicare’s founding legislation
stated that “Nothing in this title
shall be construed to authorize
any Federal officer or employee
to exercise any supervision or control
over the practice of medicine.”
Duly warned, Medicare administrators
have largely forborne from
using coverage policy or financial
incentives to discourage ineffective
or needlessly costly
methods of care. Members of the
legislative branch have not, however,
displayed similar restraint.
They have pressured those same
administrators on coverage policies
and passed laws to impose

Read the rest of this article at the New England Journal of Medicine website »