Obama team looks to federal employee health program as a model

By Alyssa Rosenberg

March 16, 2009

The Obama administration is looking closely at the federal government's health insurance program as it undertakes nationwide health care reform, a senior adviser to the president said on Monday.

The president's team has been working with the Office of Personnel Management, which administers federal benefits, Neera Tanden, counselor for health reform in the Health and Human Services Department secretary's office, told participants of the OPM-sponsored Federal Employees Health Benefits Carrier Conference in Washington. "There are a lot of ideas that we think work very well," she said.

Tanden said it was unlikely that the Obama administration simply would open the Federal Employees Health Benefits Program to the public. But she said the team was studying FEHBP to learn how its efforts to provide high-quality care and leverage large enrollment to bring down costs might be replicated.

One advantage of the federal employee program is its number of health insurance choices, which range from extremely basic coverage to plans that include more kinds of treatments and prescription drugs, according to Tanden. FEHBP also is an efficient organization, she said, noting that about 100 OPM employees coordinate coverage for millions of federal employees and their families.

But FEHBP has critics, especially on issues of cost.

Jacob Hacker, a health care scholar who advised several Democratic presidential candidates during the 2008 primaries, argued in a December 2008 report that FEHBP was less efficient than Medicare, and Medicare would provide a better model for health care reform.

Federal employee groups have made the case that OPM could do more to decrease costs by leveraging FEHBP's large membership, particularly by taking advantage of a Medicare subsidy for prescription drugs.

Tanden said that while the administration respects Hacker's work, the flexibility FEHBP offered was appealing.

"The president thought it was important to offer a wide range of choices to people," Tanden said. "We appreciate that there have been concerns about FEHBP.…But broadly, we're appreciative that FEHBP provides choice at exceedingly lower costs that are available in the individual market."

By Alyssa Rosenberg

March 16, 2009