Chairman Paul Ryan:
Future of Medicare - An Examination of IPAD Independent Payment Advisory
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
Rather than advancing
solutions to address these facts, too many politicians in Washington
have offered nothing but empty promises and false attacks. We deserve
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.
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
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.