Rep. Fleming says “Europeanization” of U.S. health care system is now in motion

Unelected bureaucrats could be empowered with unchecked authority to set rates for Medicare reimbursement and block access to prescription drugs, the Goldwater Institute warns in a lawsuit filed against the Patient Protection and Affordable Care Act (PPACA).

The legal challenge now pending before the federal district court for Arizona challenges the constitutionality of the 15 member Independent Payment Advisory Board (IPAB) created as part of the new federal health care law. IPAB has unprecedented authority to make public policy without any meaningful oversight from the legislative, judicial or executive branches of government, according to the suit.

Although the U.S. Supreme Court has ruled that it is permissible for Congress to create administrative agencies, it may not surrender its authority to make law, Diane Cohen, a senior attorney with the Goldwater Institute explained in testimony before the U.S. House Committee on Energy and Commerce earlier this year. The Supreme Court has established an “intelligible principles” test to determine whether a particular agency’s decision-making conforms to constitutional standards.

“IPAB fails this test,” Cohen told House members. “This agency is an unelected, unaccountable independent authority, which is ‘independent’ in the worst sense of the word: it is independent of Congress, independent of the president, independent of the judiciary and independent of the will of the people.”

IPAB is charged with developing proposals to “reduce the per capita rate of growth of Medicare spending,” according to PPACA. The Board’s authority is activated whenever Medicare’s future spending is expected to increase faster than the target rate, which is the average of the change in the Consumer Price Index (CPI) until 2018. At that point, the target rate is set to the nominal Gross Domestic Product (GDP) per capital plus one percentage point. The Secretary of Health and Human Services (HHS) must implement the Board’s proposals, unless Congress intervenes.

In reality, there are few limits on IPAB’s ability to legislate, Cohen points out. PPACA calls for a 3/5 supermajority vote in the U.S. Senate to change or repeal any proposals from the IPAB. It also prohibits administrative and judicial review of IPAB laws.

Since ObamaCare has already imposed $145 billion in cuts to the Medicare Advantage program, the IPAB will most likely target prescription drugs, the Pacific Research Institute (PRI) concluded in a recent report. IPAB’s actions could have a “chilling effect” on innovation in the pharmaceutical industry, PRI suggests. Hospitals, nursing homes and hospices are exempt from Medicare cuts until 2020.

“The way the law [ObamaCare] is written the Board has authority over Congress, not the other way around,” Rep. John Fleming (R-La.) observes. “Under the law, the Board won’t have anything to do so long as Congress meets these spending targets, but for at least 20 years now Congress has never met these spending targets. We also have coalitions and individuals in Congress who want the Board to make these decisions, which will provide an incentive to avoid solving these problems on the congressional level.”

Between 1984 and 2009, medical inflation has increased faster than the CPI in every year, with the exception of 1997, according to the Congressional Research Service (CRS). If ObamaCare remains in place, Fleming expects IPAB to be active.

“We are modeling our health care system after Europe’s,” Fleming said. “The IPAB is very similar to what has been set up in Great Britain. We are moving step by step toward a system of greater government control.” Policymakers have closely patterned the IPAB after the National Institute for Health and Clinical Excellence (NICE) in Great Britain, Fleming noted.

Unless the U.S. Supreme Court steps in and rules ObamaCare unconstitutional, he anticipates that it will be difficult to unwind the law’s key provisions including IPAB. In fact, PPACA includes language to protect against any legislative effort aimed at eliminating the board. In order to repeal IPAB, Congress must enact a Joint Resolution, but it is prohibited from introducing such a resolution until 2017, and must act no later than Feb. 1 2017. The resolution must be in place no later than Aug. 15, 2017. In the event that a resolution is introduced, PPACA calls for a super-majority vote, meaning 3/5 of all elected members of Congress, must support the resolution. Even if a resolution is passed, the Board would not disband until 2020.

“It is a maxim of representative government that one Congress does not have the power to bind the hands of a future Congress, which is precisely what IPAB’s anti-repeal provision does,” Cohen, the Goldwater attorney said in testimony. “The Constitution states that `All legislative powers herein granted shall be vested in a Congress of the United States.’ IPAB’s anti-repeal provision denies future congresses these basic legislative powers, thereby diminishing Congress’ constitutional powers via statue.”

Although a number of bills have been introduced to either repeal or amend ObamaCare provisions that relate to IPAB, Fleming is not certain this is the best long-term strategy.

“Suppose we do repeal the IPAB before ObamaCare is implemented,” he said. “This means we will have taken the fangs out of the snake and is that really what we want to do? Wouldn’t it be better to leave the legislation as poisonous as it is, so that when it comes time there will be no doubt that it should be repealed? The last thing in the world we want to do is to improve ObamaCare.”

Twenty-six states, including Louisiana, have filed suit arguing that the individual mandate included in President Obama’s health care law is unconstitutional. In August, the 11th Circuit Court of Appeals sided with the states and ruled that Congress exceeded its authority under the Commerce Clause. Previously, Florida District Judge Roger Vinson and Virginia District Judge Henry Hudson also ruled against the individual mandate. The Goldwater Institute’s suit is unique in that it challenges the constitutionality of IPAB, as opposed to the individual mandate.

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at and follow him on Twitter.