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Report: Medicare is a stronger insurance model than FEHBP
Medicare's relatively low overhead makes it a better model for a publicly run health insurance option for people without employer-provided coverage than the Federal Employees Health Benefits Program, a health care expert said on Wednesday.
"The Medicare program, as it's currently constituted, needs reform," said Jacob Hacker, co-director of the University of California-Berkeley School of Law's Center on Health, Economic and Family Security. "But I argue that a new public plan could embody many reforms and in doing so, could set a high standard for private plans."
Medicare sets a good example for such a plan because it controls costs better than any of its competitors, has produced quality improvements in service through cooperation with organizations such as the Veterans Health Administration and would set strong benchmarks for private health insurance providers, Hacker said in a briefing paper. He released the report in coordination with the Institute for America's Future, the think tank associated with the liberal advocacy group Campaign for America's Future; and Rep. Pete Stark, D-Calif., who chairs the House Ways and Means Health subcommittee.
FEHBP often has been held up as a standard-bearer for health insurance. During the Democratic presidential primary, Sen. Hillary Rodham Clinton, D-N.Y., proposed allowing uninsured Americans to purchase health insurance through the program as part of her plan for health care reform. At the time, Hacker said if such a strategy were implemented, it would require separate risk pools for federal employees and the general public to keep premiums from fluctuating.
But Hacker said on Wednesday that he had concluded Medicare does a better job of controlling costs than FEHBP. In the report, he noted that the Congressional Budget Office has pegged administrative costs of the public Medicare plan at less than 2 percent. In comparison, the plans in Medicare Advantage, which allows people to purchase private insurance through Medicare, have administrative costs of 11 percent. Preferred provider organization plans in FEHBP have overhead costs of 7 percent and health maintenance organization plans in the federal employee program devote between 10 percent and 12 percent of total expenditures to administrative costs.
FEHBP spending per participant also has increased faster than Medicare spending per enrollee, Hacker wrote. Between 1985 and 2002, spending per participant rose 7.3 percent annually in FEHBP, versus 5.8 percent in Medicare. Private health insurance spending grew 7.4 percent annually per enrollee during the same time period.
"The Federal Employees Health Benefits Program has frequently been invoked as a model for national reform, and indeed it provides one template for a national insurance exchange offering competing private plans," Hacker wrote. "It is not, however, a model of cost restraint when compared with Medicare."
COMMENTS
- For those who think FEHB is so wonderful, are you aware that when you turn 65 and Medicare becomes your primary provider with FEHB secondary, your FEHB premiums are not reduced one cent! Uncle Sam's share of our 2010, $14,600 premium will drop to 67% and you pay the same whether it's you and wife, or you, wife and 10 children. We can't afford FEHB coverage in retirement and will be happy to pay the $100 a month for a medigap policy. Over and above all of this we need to recognize the fact that the health care delivery system in this country is a disaster. Rich DeRosa Posted October 22, 2009 11:15 AM
- I grew up on the Canadian border and I know several Americans who married Candians and moved across the river to Canada. Not one of them would trade their Canadian insurance for our American version. A close friend moved to England after college and would not trade his English medical care for the American care he grew up with. Why do we refuse to learn from the experiences of the rest of the world? I would be thrilled if we would study the best and the worst of these other systems (which are all different from each other), and try to create a system here in the US that takes the best and tries to mitigate the worst of those models. But I guess we first have to remove the insurance companies from the discussion. As long as all of our information is filtered through them, and aimed at supporting their best interests, then we will never get real information or real change in our healthcare system. Kelly Posted March 18, 2009 10:52 AM
- Private Ins costs and Medicare costs could be reduced a lot. Have you ever counted the number of employees standing around talking and visiting while your waiting for service - expecially in the emergency room. Why do you have to have outpatient services at labs and imaging centers when the equipment and staff are standing idle in the hospitals. Also what about the unnecessary procedures they perform on you that your insurance won't pay for but the hospital staff performed. Like setting up an IV line when you go in for a neck injury. I got stuck paying for this service simply because the wanted to train and new staffer. Why can't they give you an itemized billing? No one at the Dr's office or the hospital can tell you what exactly was not reimbursed. It's impossible to dispute a billing if you aren't given a line item billing and a line item payment. C M Posted January 15, 2009 12:48 PM
