Estimate of IPAB repeal is a head-scratcher

Which has been done by the House already By: Matt DoBias March 13, 2012 11:47 PM EDT

The Congressional Budget Office’s estimate that repealing IPAB would cost $3.1 billion has people on the Hill scratching their heads even more than they usually do on a CBO health spending score. On one hand, CBO is looking at Medicare spending trends and seeing signs that growth is truly slowing. Not a recession-linked short-term blip, but a trend. And that means the Independent Payment Advisory Board — which was designed as a backstop to curb spending if needed — probably won’t have to recommend payment changes until at least 2022. Yet at the same time CBO is saying IPAB won’t really have anything to do for a decade, it’s also saying that repealing IPAB would cost $3.1 billion. Deciphered, it means CBO is saying Medicare spending would be $3.1 billion above the level it would need to be to avert triggering IPAB recommendations to bring it down. Rep. Phil Roe (R-Tenn.) confessed to being confused as to how something that is not projected to save money until a decade from now could actually cost money before that. Roe sponsored the IPAB bill that, until late last week, had been enjoying relatively smooth sailing in the House, including bipartisan voice votes in two committees. But the $3 billion meant the Republicans have to come up with an offset to Roe’s bill — and the one they have identified, a cap on noneconomic malpractice awards — alienated most Democratic supporters of IPAB repeal, erasing the rare note of bipartisanship in an effort to undo a piece of the Affordable Care Act still favored by the White House But the $3 billion was CBO’s way of hedging its bets — of evaluating “what if” scenarios that could mean the 15-member IPAB would have to act before 2022, explained Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities. “If it’s highly uncertain, CBO can say, ‘Oh well, there’s a pretty good chance that some year our estimate will turn out low and there’s a very high chance that IPAB will be triggered,’” Van de Water said. “Based on their estimate and the uncertainty surrounding their projections, this is what they think repealing IPAB will cost.” The CBO score isn’t a coin toss; its methodology is consistent with past IPAB scores. But it seemed that way to Republicans — and some Democrats — on Capitol Hill last week, who didn’t want to have to come up with an offset. “I could see why people on the Hill would be befuddled by this,” said Jim Capretta, a policy analyst at the Ethics and Public Policy Center. Capretta said the CBO’s math is solid, as is its use of “probability estimates” — although like other conservatives, he has broader skepticism over how the CBO has tackled its cost estimates for the ACA, which created the IPAB. “I think it certainly provides a small, additional speed bump, but in the scheme of things, $3.1 billion is minor in the context of Obamacare, and it’s minor in the context of the budget,” Capretta said. “People emphasize these cost estimates far too much in the legislative process. CBO doesn’t really know.” Democrats also expressed confusion over the IPAB score but said the larger point is that CBO’s report validates that the health care law is helping to tame Medicare growth. And some note that CBO in the past had been more cautious about changing payment incentives and congressional willingness to stick to provider cuts. In the past, CBO had put potential IPAB savings at $15 billion. “One only has to look at the ACA — which extended [Medicare] solvency, slowed spending growth, lowered beneficiary costs, improved benefits, modernized our delivery system and created new fraud-fighting tools — to see we’ve done a damn good job,” Rep. Pete Stark (D-Calif.) said the other day. “They weren’t giving us enough credit for our actual payment reductions and delivery system reforms,” the aide, who spoke on background, said. “I think that’s what [the most recent score] bears out.”