Report Finds Inequities in Payments for Medicare

WASHINGTON — Medicare uses inaccurate, unreliable data to pay doctors and hospitals, the National Academy of Sciences said Wednesday.

Although Medicare is a national program, it adjusts payments to health care providers to reflect regional differences in wages, rent and other costs.

But in a new report, a panel of experts from the academy’s Institute of Medicine said the payment formulas were deeply flawed.

The system of paying doctors has “fundamental conceptual problems,” and the method of paying hospitals is so unrealistic that almost 40 percent of them have been reclassified into higher-paying areas, the report said.

White House officials agreed to commission the study in March 2010 — in the last tense days of Congressional debate over President Obama’s health care overhaul — as a way to secure the votes of lawmakers from Iowa, Minnesota, Wisconsin and other states who believed their doctors and hospitals had long been shortchanged by Medicare. As a result of such underpayments, the lawmakers said, many parts of their states have difficulty recruiting doctors, nurses and other practitioners, and consumers often have difficulty finding specialists.

However, the new study says that geographic adjustments should be used to increase the accuracy of Medicare payments, not to address shortages of providers in some places.

The report criticizes the current arrangement under which Medicare distributes tens of billions of dollars based on regional variations in wages, rents and other costs in 441 hospital labor markets and 89 payment zones for doctors. Of the physician payment zones, 34 cover entire states.

The panel said Medicare should recognize a single set of 441 payment areas for doctors and hospitals alike.

As a result of such a change, the panel said, “higher-cost areas would be separated from lower-cost areas,” and payments to doctors in metropolitan areas would generally increase, while payments to doctors in some rural areas could be expected to decrease.

Michael D. Abrams, executive vice president of the Iowa Medical Society, said he was “a little surprised” and disappointed that the panel did not acknowledge that Medicare overemphasized the importance of geographic differences in office rents.

“You could argue that it costs more to deliver health care in rural America, in sparsely populated areas, than in densely populated areas,” Mr. Abrams said.

“Office space is a lot more expensive in Brooklyn, N.Y., than in Brooklyn, Iowa,” he said, but Medicare’s payment formula gives too much weight to such differences.

Mr. Abrams said he was concerned that the panel’s recommendations could “make things worse” for many doctors and patients in his state. The panel will analyze the impact of its recommendations in a report next spring.

By the end of this year, under the new health care law, the secretary of health and human services must send Congress a plan to revise the way Medicare adjusts payments to reflect regional differences in hospital wages.

Any such plan could have major economic and political implications. Wages account for about two-thirds of hospital costs, the panel said, and regional differences are substantial, with a registered nurse paid almost twice as much per hour in San Francisco as in Springfield, Mo.

Under the new health law, geographic adjustments may not increase total costs to Medicare, so that an increase in payments to one hospital or group of hospitals must generally be offset by decreases in payments to others.

Frank A. Sloan, a professor of economics at Duke University and chairman of the study panel, said Medicare needed to find a new source of data on commercial office rents. The current measure, based on rent for a two-bedroom apartment, does not accurately reflect the prices doctors face, he said.

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Slow Recovery Worsens Financial State of Medicare

The estimates, in the annual report by the Medicare trustees, were immediately swept up into the already inflamed political battle over federal spending, debt and the future of entitlement programs.

The trustees said that payroll tax revenues, which provide most of the money for Medicare’s hospital insurance trust fund, were lower than expected last year because earnings were “considerably lower than projected” and the economy was weaker than expected.

Republicans said the bleaker picture for Medicare showed a need for immediate action to shore up the finances of the program, which insures 47.5 million people who are 65 and older or disabled.

“The biggest threat Medicare faces right now is the status quo,” said the House speaker, John A. Boehner, Republican of Ohio. “The trustees’ report makes it clear that if we do nothing, Medicare will not be able to pay promised benefits to American seniors.”

Democrats said that the financial outlook for Medicare would have been much worse without the new health care law. The law, which President Obama cites as one of his greatest political accomplishments, promises to be a central point of conflict in the 2012 presidential election.

Without the new law, said Kathleen Sebelius, the secretary of health and human services, “Medicare would have gone bankrupt in 2016, only five years from now.”

Senator Max Baucus, Democrat of Montana and chairman of the Senate Finance Committee, said, “The current economic crisis has hit the Medicare trust fund, and hit it hard.” Mr. Baucus, an architect of the new law, and other Democrats vowed to resist Republican efforts to repeal it.

The trustees said the financial outlook for Social Security had changed little. They said the Social Security trust fund would be exhausted in 2036, one year sooner than projected in last year’s report, and even then, they said, tax revenue would be sufficient to pay three-fourths of promised benefits through 2085.

It is inconceivable that politicians would allow either program to run out of money. The projected dates of insolvency are widely used as a measure of the financial condition of Social Security and Medicare, which together account for more than one-third of all federal spending.

In unveiling the new estimates, Treasury Secretary Timothy F. Geithner, the managing trustee of the trust funds, noted the need for additional borrowing to keep the government’s myriad commitments in other programs.

“On Monday,” Mr. Geithner said, “just three days from today, the United States will reach the debt limit set by Congress. Because Congress has not yet acted, we have now set in motion a series of extraordinary measures that will give Congress some additional time to raise the debt limit.”

As a condition of increasing the debt limit, many Republicans are demanding changes in benefit programs. But House Republicans have discovered that they are playing with political dynamite when they propose major changes in Medicare.

The reports were signed by the six trustees: three cabinet officers, the Social Security commissioner and two public representatives.

The Medicare report included a disclaimer by the chief Medicare actuary, Richard S. Foster. “The financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations” in the short term or the long range, said Mr. Foster, a civil servant whose independence is protected by law.

The projections assume that Medicare will cut doctors’ fees by 29 percent on Jan. 1, as required under current law, but Congress routinely intercedes to block such cuts.

Moreover, the report says that projected Medicare costs over 75 years are about 25 percent lower because of the new health care law.

Under the law, Medicare will hold down payments to hospitals and other health care providers to reflect presumed increases in productivity. But, Mr. Foster said, if these constraints are kept in place, Medicare payments to providers will eventually be “far below the levels paid by private health insurance.”

 

G.O.P. Rethinking Bid to Overhaul Medicare Rules

While top Republicans insisted that they remained committed to the Medicare initiative, which had become the target of intense attacks by Democrats and liberal groups in recent weeks, the lawmaker who would have to turn the proposal into legislation said he had no plans to do so any time soon.

The lawmaker, Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee, said that while he still supports the party’s Medicare approach, opposition from Democrats made it pointless to proceed.

“I’m not interested in talking about whether the House is going to pass a bill that the Senate shows no interest in,” Mr. Camp said in an appearance at the National Press Club. “I’m not interested in laying down more markers. I am interested in solutions.”

Coupled with remarks by other House Republican leaders, his statement suggested that the party’s Medicare proposal had been shelved, even though the party’s lawmakers had taken a risky vote to pass the budget in the House just last month, and in the past two weeks had attempted to sell it to constituents in often-stormy town hall meetings.

Republicans suggested that they would continue to press to rein in the growing costs of Medicare, even if not through the current proposal, which would transform the program into one in which the federal government subsidized the purchase of private health insurance coverage by Americans 65 and older.

Putting aside the proposal would remove one of the biggest points of contention between the parties as they address both the nation’s long-term budget problems and the more immediate need for an agreement on raising the federal debt limit.

The development came as Vice President Joseph R. Biden Jr. held a first negotiating session with members of both parties to try to find a deal that would allow Congress to raise the debt ceiling this year.

Republicans are demanding spending cuts and other measures to reduce the budget deficit as the price of support for raising the debt ceiling.

The Republican Medicare plan was never likely to be adopted as part of any deal on the debt limit. But the decision by Republicans to pull back the proposal was a tacit acknowledgment that the politics of entitlement reform remain so volatile that pressing ahead in the face of intense Democratic opposition could cost the party dearly at the polls.

As they rolled out their budget last month, Republicans hailed the Medicare plan as a bold attempt to address chronic deficits. All but four House Republicans voted for the budget proposal, which was developed by Representative Paul D. Ryan of Wisconsin, chairman of the House Budget Committee.

President Obama and Congressional Democrats quickly went on the attack, condemning the Republican plan. Mr. Camp’s statement on Medicare was in sync with similar comments by other top Republicans, including Representatives Eric Cantor of Virginia, the majority leader, and Mr. Ryan. They said Republicans recognized that they were unlikely to win approval of their sweeping Medicare overhaul in the debt-reduction talks that began at Blair House on Thursday.

“The reality is this president has excoriated our budget plan and the Medicare proposal in the plan,” Mr. Cantor told reporters.

The negotiators, who agreed to meet next on Tuesday, are combing their respective budget proposals to find common ground.

But given the parties’ differences and the short time frame for negotiations before Congress must increase the debt limit, both sides have indicated that any compromise is likely to be based less on specific policy changes than on proposals setting deficit-reduction targets for coming years. Those targets would be combined with triggers to make automatic cuts in spending — and tax increases, in Democrats’ view — if the targets are exceeded.

While Mr. Cantor outlined the House-passed Ryan budget as Republicans’ opening bid in the Blair House negotiations, he said little about the Medicare proposals, participants said.

“He didn’t need to talk about it in that room,” said one participant. “Everyone knows it’s dead.”

Still, the leadership comments surprised many Republican lawmakers, who said they had expected to move forward on the plan.

Some members — especially freshmen from districts with steep re-election hills to scale — were upset to hear that the plan could be scotched after they had voted for the budget proposal and then invested so much hard work trying to sell it back home over the spring recess.

“I would be very disappointed if we didn’t follow through,” said Representative Joe Walsh, whose district lies in the Chicago suburbs. “We have spent, gosh, a month or two now trying to educate the American people to a pretty good reception. I appreciate the chairman’s notion, but I would continue to respectfully challenge him to get this thing through committee.”

Representative Bobby Schilling of Illinois said backing down now would be giving in “to lies and deceit told by the other side.”

“We’ve just got to address this problem,” he said. “Is it going to be perfect? No, but it needs to be addressed.”

The House speaker, John A. Boehner, said Thursday that the party was not backing away from the Medicare overhaul. But he said Mr. Camp’s view was a recognition of the “political realities that we face.”

Democrats said it did not matter if Republicans decided to jettison their Medicare plan because they had already voted for it as part of the budget.

“The Republicans are slowly realizing their plan to privatize Medicare is a political disaster,” said Senator Charles E. Schumer of New York, the No. 3 Democrat. “But until they renounce their vote for it, they are still going to own it.”

Mr. Ryan said he believed the future of the Medicare proposal would be decided in next year’s elections.

“At the end of the day, I think 2012 is going to make the decision,” Mr. Ryan said at a budget forum Thursday, predicting voters would back the plan he said protects Medicare from insolvency. “The people are ahead of the political class.”

Jennifer Steinhauer contributed reporting.

 

Republicans in House Signal Retreat on Medicare Plan

While top Republicans insisted that they remained committed to the Medicare initiative, which had become the target of intense attacks by Democrats and liberal groups in recent weeks, the lawmaker who would have to turn the proposal into legislation said he had no plans to do so any time soon.

The lawmaker, Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee, said that while he still supports the party’s Medicare approach, opposition from Democrats made it pointless to proceed.

“I’m not interested in talking about whether the House is going to pass a bill that the Senate shows no interest in,” Mr. Camp said in an appearance at the National Press Club. “I’m not interested in laying down more markers. I am interested in solutions.”

Coupled with remarks by other House Republican leaders, his statement suggested that the party’s Medicare proposal had been shelved, even though the party’s lawmakers had taken a risky vote to pass the budget in the House just last month, and in the past two weeks had attempted to sell it to constituents in often-stormy town hall meetings.

Republicans suggested that they would continue to press to rein in the growing costs of Medicare, even if not through the current proposal, which would transform the program into one in which the federal government subsidized the purchase of private health insurance coverage by Americans 65 and older.

Putting aside the proposal would remove one of the biggest points of contention between the parties as they address both the nation’s long-term budget problems and the more immediate need for an agreement on raising the federal debt limit.

The development came as Vice President Joseph R. Biden Jr. held a first negotiating session with members of both parties to try to find a deal that would allow Congress to raise the debt ceiling this year.

Republicans are demanding spending cuts and other measures to reduce the budget deficit as the price of support for raising the debt ceiling.

The Republican Medicare plan was never likely to be adopted as part of any deal on the debt limit. But the decision by Republicans to pull back the proposal was a tacit acknowledgment that the politics of entitlement reform remain so volatile that pressing ahead in the face of intense Democratic opposition could cost the party dearly at the polls.

As they rolled out their budget last month, Republicans hailed the Medicare plan as a bold attempt to address chronic deficits. All but four House Republicans voted for the budget proposal, which was developed by Representative Paul D. Ryan of Wisconsin, chairman of the House Budget Committee.

President Obama and Congressional Democrats quickly went on the attack, condemning the Republican plan. Mr. Camp’s statement on Medicare was in sync with similar comments by other top Republicans, including Representatives Eric Cantor of Virginia, the majority leader, and Mr. Ryan. They said Republicans recognized that they were unlikely to win approval of their sweeping Medicare overhaul in the debt-reduction talks that began at Blair House on Thursday.

“The reality is this president has excoriated our budget plan and the Medicare proposal in the plan,” Mr. Cantor told reporters.

The negotiators, who agreed to meet next on Tuesday, are combing their respective budget proposals to find common ground.

But given the parties’ differences and the short time frame for negotiations before Congress must increase the debt limit, both sides have indicated that any compromise is likely to be based less on specific policy changes than on proposals setting deficit-reduction targets for coming years. Those targets would be combined with triggers to make automatic cuts in spending — and tax increases, in Democrats’ view — if the targets are exceeded.

While Mr. Cantor outlined the House-passed Ryan budget as Republicans’ opening bid in the Blair House negotiations, he said little about the Medicare proposals, participants said.

“He didn’t need to talk about it in that room,” said one participant. “Everyone knows it’s dead.”

Still, the leadership comments surprised many Republican lawmakers, who said they had expected to move forward on the plan.

Some members — especially freshmen from districts with steep re-election hills to scale — were upset to hear that the plan could be scotched after they had voted for the budget proposal and then invested so much hard work trying to sell it back home over the spring recess.

“I would be very disappointed if we didn’t follow through,” said Representative Joe Walsh, whose district lies in the Chicago suburbs. “We have spent, gosh, a month or two now trying to educate the American people to a pretty good reception. I appreciate the chairman’s notion, but I would continue to respectfully challenge him to get this thing through committee.”

Representative Bobby Schilling of Illinois said backing down now would be giving in “to lies and deceit told by the other side.”

“We’ve just got to address this problem,” he said. “Is it going to be perfect? No, but it needs to be addressed.”

The House speaker, John A. Boehner, said Thursday that the party was not backing away from the Medicare overhaul. But he said Mr. Camp’s view was a recognition of the “political realities that we face.”

Democrats said it did not matter if Republicans decided to jettison their Medicare plan because they had already voted for it as part of the budget.

“The Republicans are slowly realizing their plan to privatize Medicare is a political disaster,” said Senator Charles E. Schumer of New York, the No. 3 Democrat. “But until they renounce their vote for it, they are still going to own it.”

Mr. Ryan said he believed the future of the Medicare proposal would be decided in next year’s elections.

“At the end of the day, I think 2012 is going to make the decision,” Mr. Ryan said at a budget forum Thursday, predicting voters would back the plan he said protects Medicare from insolvency. “The people are ahead of the political class.”

Jennifer Steinhauer contributed reporting.

 

Proposal for Medicare Is Unlike Federal Employee Plan

Under the federal employees’ health plan, which covers eight million people, the government pays a fixed share of premiums. So the federal contribution generally keeps pace with rising premiums, which in turn reflect rising health costs.

No such guarantee exists under the Republicans’ plan to transform Medicare, approved by the House on April 15 as part of a budget blueprint to cut federal spending and deficits.

Medicare and the budget will be high on the agenda when Congress reconvenes Monday after a two-week recess in which Republicans were barraged with complaints from constituents alarmed about the possible erosion of Medicare benefits.

Under the House Republican proposal, starting in 2022 new Medicare beneficiaries would receive coverage through private insurance plans, and Medicare would subsidize the cost.

The federal payment for a typical 65-year-old would be set at $8,000 a year in 2022, about the same as what Medicare is expected to spend under current law.

In later years, the federal payment would be increased to reflect the age of a beneficiary and general inflation, measured by the Consumer Price Index. But health costs and insurance premiums have, for years, been rising faster than consumer prices in general.

So, the Congressional Budget Office says, under the Republican plan, Medicare would pay a shrinking share of beneficiaries’ total health costs, and seniors would pay a growing share. For a typical 65-year-old, that share would be 68 percent in 2030, more than twice what it would be under current law, the budget office said.

Today, Medicare is an open-ended entitlement. It does not have a fixed budget, though Congress has defined the benefits and prescribed payment rates for doctors and hospitals.

House Republicans have repeatedly likened their proposal to the Federal Employees Health Benefits Program, in which most lawmakers are enrolled.

“We want to prevent Medicare from going bankrupt,” said Representative Paul D. Ryan of Wisconsin, chairman of the House Budget Committee and the lead advocate for the budget proposal. “We want a system that’s sustainable. We want a system that’s solvent and that people can rely upon: guaranteed coverage options just like we have in Congress. That’s what we are proposing.”

Beginning in 2022, Mr. Ryan said, “new Medicare beneficiaries would be enrolled in the same kind of health care program that members of Congress enjoy.”

Under their proposal, House Republicans say, Medicare would subsidize private health plans offered to beneficiaries, just as the federal government helps pay premiums for private health plans offered to its employees.

But Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, said the similarities ended there.

“We keep hearing that Republicans are offering seniors exactly what members of Congress get,” Mr. Van Hollen said. “It simply is not true.”

Under the federal employee program, the government’s share of premiums is set at 72 percent of the average premium for all plans, but it cannot exceed 75 percent of the premium for any particular plan.

The health care handbook for federal employees explains, “This formula is known as the ‘fair share’ formula because it will maintain a consistent level of government contributions, as a percentage of total program costs, regardless of which health plan enrollees elect.”

In practice, the government pays three-fourths of the premium for relatively inexpensive health plans and about two-thirds of the premium for those that cost more than the average.

The maximum annual government contribution this year is $10,503 for family coverage.

An example shows how the formula works. For family coverage under the most popular plan — the standard option offered by Blue Cross and Blue Shield — the total annual premium is $15,682 this year. The government pays $10,503 (67 percent) and the federal worker pays the rest, $5,179.

For family coverage under the cheaper Blue Cross basic option, the total premium is $12,744; the government pays $9,558 (75 percent) and the employee pays $3,186.

Even so, Conor Sweeney, a spokesman for Mr. Ryan, insisted that the comparison to the federal employees’ plan was valid. “The model, the structure, the approach is inarguably similar: the government pays a share of the individual’s premiums” in both the employee program and the House Republicans’ Medicare proposal.

If Democrats showed any interest in this approach, lawmakers could still negotiate the amount of the federal payment to private health plans, and how to adjust it from year to year, Mr. Sweeney said. Earlier versions of Mr. Ryan’s Medicare proposal, he added, would have allowed the federal contribution to grow at a somewhat higher rate than assumed in the House budget blueprint.

 

Obama Panel to Curb Medicare Finds Foes in Both Parties

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Mr. Obama wants to expand the power of the 15-member panel, which was created by the new health care law, to rein in Medicare costs.

But not only do Republicans and some Democrats oppose increasing the power of the board, they also want to eliminate it altogether. Opponents fear that the panel, known as the Independent Payment Advisory Board, would usurp Congressional spending power over one of the government’s most important and expensive social programs.

Under the law, spending cuts recommended by the presidentially appointed panel would take effect automatically unless Congress voted to block or change them. In general, federal courts could not review actions to carry out the board’s recommendations. The impact of the board’s decisions could be magnified because private insurers often use Medicare rates as a guide or a benchmark in paying doctors, hospitals and other providers.

Last week, in his speech on deficit reduction, Mr. Obama said he wanted to beef up the board’s cost-cutting powers in unspecified ways should the growth of Medicare spending exceed certain goals. Supporters say the board will be able to make tough decisions because it will be largely insulated from legislative politics.

Lawmakers do not agree. Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, called it “a rationing board” and said Congress should not “delegate Medicare decision-making to 15 people appointed by the president.” He said Mr. Obama’s proposal would allow the board to “impose more price controls and more limitations on providers, which will end up cutting services to seniors.”

Senator John Cornyn, a Texas Republican who introduced a bill last month to repeal the Medicare board, said the president’s proposal “punts difficult decisions on health spending to an unelected, unaccountable board of bureaucrats.”

Representative Allyson Y. Schwartz, a Pennsylvania Democrat prominent on health care issues, said: “It’s our constitutional duty, as members of Congress, to take responsibility for Medicare and not turn decisions over to a board. Abdicating this responsibility, whether to insurance companies or to an unelected commission, undermines our ability to represent our constituents, including seniors and the disabled.”

Ms. Schwartz signed up on Friday as co-sponsor of a bill to repeal the board.

The purpose of the panel, according to the health care law, is to reduce the rate of growth in Medicare spending per beneficiary. The law sets annual goals — “target growth rates” — for Medicare spending below the average of the last 15 years.

Board members will be subject to Senate confirmation — no easy feat in the current political climate. Terms are six years. Members can serve no more than two full consecutive terms. The White House has yet to submit any nominations for the board.

“Why have legislators?” asked Representative Pete Stark of California, the senior Democrat on the Ways and Means Subcommittee on Health.

In some ways, Mr. Stark said, expanding the power of the board could be as bad as giving vouchers to Medicare beneficiaries to buy private insurance. “In theory at least, you could set the vouchers at an adequate level,” he said. “But, in its effort to limit the growth of Medicare spending, the board is likely to set inadequate payment rates for health care providers, which could endanger patient care.”

Representative Shelley Berkley, Democrat of Nevada, said she wanted to repeal the Medicare board. “I have great faith that this administration can put together a strong, independent and knowledgeable board,” Ms. Berkley said, but she said she had less confidence in future administrations.

Mark Parkinson, president of the American Health Care Association, which represents nursing homes, said his members disliked the board because it would allow Congress and the president to “subcontract out difficult decisions.”

Still, the idea of a more potent Medicare board could be a live option if the White House insisted on it in budget negotiations with Congress.

Mr. Obama said last week that he would “reduce wasteful subsidies and erroneous payments,” cut spending on prescription drugs and take other steps to save $500 billion in Medicare and Medicaid by 2023. “But if we’re wrong and Medicare costs rise faster than we expect,” he said, the Medicare board would have “the authority to make additional savings by further improving Medicare.”

The president’s proposal would set stricter goals for Medicare spending and establish some type of automatic cost-cutting device as an “enforcement mechanism,” but Mr. Obama did not say exactly how it would work.

Kathleen Sebelius, the secretary of health and human services, described the board as a backstop to “ensure that health costs are reduced.” The board might not have to take action if the president’s other proposals slow the growth of Medicare spending, she said.

The board grew out of proposals by Mr. Obama and Senator John D. Rockefeller IV, Democrat of West Virginia.

“Medicare payment policy should be determined by experts, using evidence, not by the undue influence of special interests,” Mr. Rockefeller said.

AARP, the American Medical Association and the American Hospital Association voiced concern about the president’s latest proposal.

“Relying on arbitrary spending targets is not a good way to make health policy, especially when decisions may be left to the unelected and unaccountable,” said A. Barry Rand, chief executive of AARP, the lobby for older Americans.

Under the law, the board cannot make recommendations to “ration health care,” raise revenues or increase beneficiaries’ premiums, deductibles or co-payments. This increases the likelihood that the board will try to save money by trimming Medicare payments to health care providers.

 

Obama Panel to Curb Medicare Finds Foes in Both Parties

 

Mr. Obama wants to expand the power of the 15-member panel, which was created by the new health care law, to rein in Medicare costs.

But not only do Republicans and some Democrats oppose increasing the power of the board, they also want to eliminate it altogether. Opponents fear that the panel, known as the Independent Payment Advisory Board, would usurp Congressional spending power over one of the government’s most important and expensive social programs.

Under the law, spending cuts recommended by the presidentially appointed panel would take effect automatically unless Congress voted to block or change them. In general, federal courts could not review actions to carry out the board’s recommendations. The impact of the board’s decisions could be magnified because private insurers often use Medicare rates as a guide or a benchmark in paying doctors, hospitals and other providers.

Last week, in his speech on deficit reduction, Mr. Obama said he wanted to beef up the board’s cost-cutting powers in unspecified ways should the growth of Medicare spending exceed certain goals. Supporters say the board will be able to make tough decisions because it will be largely insulated from legislative politics.

Lawmakers do not agree. Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, called it “a rationing board” and said Congress should not “delegate Medicare decision-making to 15 people appointed by the president.” He said Mr. Obama’s proposal would allow the board to “impose more price controls and more limitations on providers, which will end up cutting services to seniors.”

Senator John Cornyn, a Texas Republican who introduced a bill last month to repeal the Medicare board, said the president’s proposal “punts difficult decisions on health spending to an unelected, unaccountable board of bureaucrats.”

Representative Allyson Y. Schwartz, a Pennsylvania Democrat prominent on health care issues, said: “It’s our constitutional duty, as members of Congress, to take responsibility for Medicare and not turn decisions over to a board. Abdicating this responsibility, whether to insurance companies or to an unelected commission, undermines our ability to represent our constituents, including seniors and the disabled.”

Ms. Schwartz signed up on Friday as co-sponsor of a bill to repeal the board.

The purpose of the panel, according to the health care law, is to reduce the rate of growth in Medicare spending per beneficiary. The law sets annual goals — “target growth rates” — for Medicare spending below the average of the last 15 years.

Board members will be subject to Senate confirmation — no easy feat in the current political climate. Terms are six years. Members can serve no more than two full consecutive terms. The White House has yet to submit any nominations for the board.

“Why have legislators?” asked Representative Pete Stark of California, the senior Democrat on the Ways and Means Subcommittee on Health.

In some ways, Mr. Stark said, expanding the power of the board could be as bad as giving vouchers to Medicare beneficiaries to buy private insurance. “In theory at least, you could set the vouchers at an adequate level,” he said. “But, in its effort to limit the growth of Medicare spending, the board is likely to set inadequate payment rates for health care providers, which could endanger patient care.”

Representative Shelley Berkley, Democrat of Nevada, said she wanted to repeal the Medicare board. “I have great faith that this administration can put together a strong, independent and knowledgeable board,” Ms. Berkley said, but she said she had less confidence in future administrations.

Mark Parkinson, president of the American Health Care Association, which represents nursing homes, said his members disliked the board because it would allow Congress and the president to “subcontract out difficult decisions.”

Still, the idea of a more potent Medicare board could be a live option if the White House insisted on it in budget negotiations with Congress.

Mr. Obama said last week that he would “reduce wasteful subsidies and erroneous payments,” cut spending on prescription drugs and take other steps to save $500 billion in Medicare and Medicaid by 2023. “But if we’re wrong and Medicare costs rise faster than we expect,” he said, the Medicare board would have “the authority to make additional savings by further improving Medicare.”

The president’s proposal would set stricter goals for Medicare spending and establish some type of automatic cost-cutting device as an “enforcement mechanism,” but Mr. Obama did not say exactly how it would work.

Kathleen Sebelius, the secretary of health and human services, described the board as a backstop to “ensure that health costs are reduced.” The board might not have to take action if the president’s other proposals slow the growth of Medicare spending, she said.

The board grew out of proposals by Mr. Obama and Senator John D. Rockefeller IV, Democrat of West Virginia.

“Medicare payment policy should be determined by experts, using evidence, not by the undue influence of special interests,” Mr. Rockefeller said.

AARP, the American Medical Association and the American Hospital Association voiced concern about the president’s latest proposal.

“Relying on arbitrary spending targets is not a good way to make health policy, especially when decisions may be left to the unelected and unaccountable,” said A. Barry Rand, chief executive of AARP, the lobby for older Americans.

Under the law, the board cannot make recommendations to “ration health care,” raise revenues or increase beneficiaries’ premiums, deductibles or co-payments. This increases the likelihood that the board will try to save money by trimming Medicare payments to health care providers.