Chairman Paul Ryan: Future of Medicare - An Examination of IPAD Independent Payment Advisory Board

July 13, 2011

For years, politicians in both political parties have not been honest with the American people about Medicare.

The facts are clear:

  • Health care costs are skyrocketing, growing at 8% a year. Medicare spending is on pace to double over the next decade, exhausting its remaining funds.
  • 10,000 baby boomers are retiring every day, as fewer workers are left paying into the program.
  • Life expectancy was at 70 when Medicare was created, and is at 79 today.
  • Nonpartisan experts – including the Congressional Budget Office and Medicare’s own trustees – repeatedly warn of the looming insolvency of this critical program.

Rather than advancing solutions to address these facts, too many politicians in Washington have offered nothing but empty promises and false attacks. We deserve better.

Chairman Paul Ryan

Due in large part to this committee’s efforts, I believe that the debate is shifting to better reflect Medicare’s inescapable math. President Obama was exactly right when he stated yesterday: “If you look at the numbers, Medicare in particular will run out of money, and we will not be able to sustain that program no matter how much taxes go up. It's not an option for us to just sit by and do nothing.”


Senator Joe Lieberman, who has worked in a bipartisan manner to offer ideas of his own, put it well when he recently stated: “We can only save Medicare if we change it.” The purpose of today’s hearing is to examine the changes to Medicare made by the President’s health care law. Specifically, we will seek to better understand the Independent Payment Advisory Board’s role in achieving the hundreds of billions of dollars of savings called for by the President. While I imagine we’ll hear about the many different expansions of government buried in the 2,700-page law, today’s hearing is focused is on page 1000, Section 3403.

The Independent Payment Advisory Board – or IPAB – is a new executive branch agency created by the President’s healthcare law. The law empowers this board of 15 unelected officials with the authority to reduce Medicare spending. Unless overturned by a supermajority in Congress, the recommended cuts dictated by this board will become law.

Bipartisan concerns have been raised with several aspects of this board. While the proponents claim that beneficiaries will be held harmless from the board’s decisions, how can IPAB impose sharp cuts to providers without any adverse impact on their patients?

Given their unprecedented new power over Medicare, to whom are these 15 bureaucrats accountable? There are bipartisan concerns on this question. Democrats, including members of this committee, have raised concerns with Congress turning its responsibilities over to this board.

Seniors are also seeking clarity on the President’s recent efforts to expand this board’s power over Medicare. In an April speech, the President called for IPAB to enforce further restrictions in Medicare’s growth rate – down to GDP + 0.5%. The health-care law is already driving Medicare’s reimbursement rates well below the artificially low Medicaid rates. According to Medicare’s Chief Actuary Richard Foster, the health care law will pay doctors less than half of what their services cost at the end of the decade, and down to 33% in the decades ahead. Foster warns that these cuts are driving Medicare providers out of business and resulting in harsh disruptions in quality and access for seniors.

Yet the President’s ‘framework’ calls upon IPAB to slash reimbursements even further. It remains incumbent upon the Administration to specify how this board will squeeze hundreds of billions of additional dollars from Medicare over the next decade, as the President has proposed.

I want to thank Secretary Sebelius for testifying today to help address these concerns. There is no question that we have differences on how to address Medicare’s unsustainable future, but I appreciate your commitment to clarifying this debate for policymakers and for the American people.

I also want to thank our second panel of distinguished health care experts who will further discuss the merits of IPAB. We look forward to testimony from former CBO Director Doug Holtz-Eakin, Grace-Marie Turner of the Galen Institute, and Dr. Judith Feder of the Urban Institute.

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