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Health-Care Goal Should Be Quality, Not Quantity

Author: Peter R. Orszag, Adjunct Senior Fellow
September 4, 2012
Bloomberg.com

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The Independent Payment Advisory Board is perhaps the most mischaracterized part of the health-care reform law -- which is saying something, given how many false charges have been hurled at the Affordable Care Act. The IPAB was designed to be a backstop to make sure the health-care system makes a transition from fee-for-service payments to payments based on value.

Because both sides of the political aisle agree that we need to move away from fee-for-service, you would think the IPAB would enjoy support from Democrats and Republicans alike. That bipartisan appeal was reflected in the vaunted bipartisan Bowles-Simpson budget commission report, which proposed strengthening the board.

The IPAB -- a group of 15 health experts -- was designed by the Barack Obama administration, however, and so by the new, hyperpartisan laws of political economy, conservatives have a duty to criticize it. The most recent critique can be found in a misguided Wall Street Journal editorial.

Before we get to the IPAB, let's look closer at the needed shift in the way payments are made for health care. A white paper from TriZetto Group Inc., a health information-technology and management company, assessed this core problem more accurately than the Wall Street Journal editorial board did.

"Providers, especially physicians, control the majority of healthcare costs through decisions about diagnosis and treatment," the TriZetto authors wrote, and they correctly emphasized the need for "direct modification of the behaviors of providers (versus consumers or payers)." The Wall Street Journal, like Republican vice-presidential nominee Paul Ryan in his budget proposal, instead focuses on pushing consumers and payers to make more economical choices. (Disclosure: In 2010, TriZetto paid me to speak at a conference.)

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