Thinking in public about anything that matters.

Obamacare’s “Independent Payment Advisory Board”


I believe in government as policeman.  Its job is to be the legal power that pursues those who commit violence and fraud, who initiate physical force against others.   Its job is to punish right’s violators.  It’s job is to go after criminals and defend against foreign aggressors.  It’s job is the use of force in retaliation against those who initiate it and to stop those who threaten to initiate it.

It is *the* legal entity that has the right to use violence in pursuit of rights violators and to use violence, if necessary to stop, to imprison, or even to kill those who do not demonstrate through their actions a willingness to avoid initiating violence or using fraud against their fellowman.  That job is complex enough and requires vigilance on the part of the population to ensure that the coercive power of the state doesn’t get out of hand.

But there are many people who think that government should not be limited to the policing power.  It should provide a security net for senior citizens and for the poor, it should pay for or at least help with health care, and a whole host of other duties that are not normally coercive… except that when government gets into them, they become so.  At the very least, the taxpayer is forced to pay into funds that he or she might otherwise opt out of, on pain of some legal punishment.  But beyond that, there is the addition of layers of bureaucracy and the expense and complications that that brings.  And there is the narrowing of choice, in order to make the administration of the sphere involved simpler and less expensive for the bureaucracy to handle.  Instead of the expansion of alternatives, bureaucratic management tends toward a one size fits all model.

This is one of the reasons I don’t approve of government involvement in health care insurance.  As long as it’s guarding against fraud in the industry, it’s doing its job.  But when it interferes in the market itself, things get complicated.  And coercive.

Sometime I’d like to explore the case for alternative solutions to our health care cost/payment troubles instead of the government-controlled ones.  But the topic I want to put up for discussion  is a particular part of Obamacare: the Independent Payment Advisory Board (IPAB).

Howard Dean,  governor of Vermont from 1991 to 2002 and a former chairman of the Democratic National Committee, has written an article for the Wall Street Journal.  Unlike me, Mr. Dean favors Obamacare overall, but like me he sees that the IPAB – Obamacare’s health-care rationing body – is a serious threat to individualized care necessary to suit the needs of actual patients.

Here is an excerpt from his article:

“One major problem is the so-called Independent Payment Advisory Board. The IPAB is essentially a health-care rationing body. By setting doctor reimbursement rates for Medicare and determining which procedures and drugs will be covered and at what price, the IPAB will be able to stop certain treatments its members do not favor by simply setting rates to levels where no doctor or hospital will perform them.

“There does have to be control of costs in our health-care system. However, rate setting—the essential mechanism of the IPAB—has a 40-year track record of failure. What ends up happening in these schemes (which many states including my home state of Vermont have implemented with virtually no long-term effect on costs) is that patients and physicians get aggravated because bureaucrats in either the private or public sector are making medical decisions without knowing the patients. Most important, once again, these kinds of schemes do not control costs. The medical system simply becomes more bureaucratic.

“The nonpartisan Congressional Budget Office has indicated that the IPAB, in its current form, won’t save a single dime before 2021. As everyone in Washington knows, but less frequently admits, CBO projections of any kind—past five years or so—are really just speculation. I believe the IPAB will never control costs based on the long record of previous attempts in many of the states, including my own state of Vermont.”

I invite readers to join a serious discussion of a serious topic that will affect us all in the near future.  If you take part in the discussion, please do not resort to deliberate personal attacks on your opponents, no personal insults or moral accusations that can distract from dealing with the very important matters at hand.  Everyone needs to sort out the complex of issues here, to understand them and think seriously and honestly about them.   It’s our health and perhaps even our lives at stake.



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  1. Simondo

    One thing I have noticed is the very high cost of insurance premiums in the US compared to Australia. ($1300 per month for two healthy people in California versus about $500 per month in Victoria for a very high level of cover.)

    The amount spent on healthcare in the US in about 2011 was about 2.6 trillion dollars which equates to just under 9k per person.

    I would be interested to know what drives these costs. For example, the cost of lawsuits, overtesting, hospital supplies, drug companies having to comply with FDA regulations etc.

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  2. SydneyKendall

    Yes, my insurance premiums here in Australia are a lot lower than they were in the US (although my premiums *are*creeping up, and the government just discontinued a subsidy that helped to give a bit of a break to those who pay for their own insurance).

    However, my income taxes are much higher in Australia than in the US. I just visited my American HR Block accountant when I was recently in the US, and found that I didn’t have enough income to even have to pay income tax for the last 2 years. This was without considering the fact that I pay taxes in Australia. My accountant figured the tax solely on my income and allowable deductions.

    But in Australia I’m paying my taxes quarterly. Last year and the year before I was paying about $1600 per quarter, which has now been lowered to $719 per quarter. Does this high tax have to do with the government scheme for medical care? I don’t know. But I’m guessing, yes.

    I’ve been looking for a series of videos made by a woman physician before Obamacare went through. She had read the whole bill and explained what she thought was disastrous about it. She also presented a plan for making quality medical care available to all through non-government means. I thought it was excellent and I’d like to share. Unfortunately, my computer died and hence my Favorites died with it. I’ve searched the Internet a bit, but can’t remember the doctor’s name and haven’t had any luck with key words, so far.

    If anyone knows the videos I’m referring to, please post a link, or the name of the doctor. Thanks!

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  3. SydneyKendall

    Simondo, here’s a series of videos by Dr. Jill Vecchio, analysing the Obamacare Act:

    It gives a very clear view of why medicine and insurance is so expensive in the USA. There are 7 videos. Note that the first one is at the end of the list, and the last is first.

    Dr. Vecchio is very clear and seems quite thorough in her analysis. After watching, you’ll understand a lot more than most people do about the high cost of American medicine and why many people object that Obamacare is not the solution.

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  4. Simondo

    Thank you for the links and I will make the time to watch them. (I certainly don’t support Obamacare or any government involvement in the medical sector.)

    Hopefully someone can develop a roadmap that will see lower costs through deregulation and such.

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  5. SydneyKendall

    You’re very welcome, Simondo.

    Even before Obamacare, freemarketers were presenting free market ideas for bringing down costs, but the lovers of government coercion clapped their hands over their ears and went “La! La! La!”

    Some people already know the way to fix it. Other people don’t want to hear it.

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