March 30, 1999

March 30, 1999 | Commentary on Health Care

Getting Medicare Off Life Support

Say you're in a boat that's sinking because of a hole in the hull. What's your wisest course of action: Bailing out the water as quickly as possible, or fixing the hole?

Lawmakers trying to reform Medicare before it starts going broke in 2008 now face the same type of decision. They can take the route President Clinton recommends: Delay Medicare's insolvency for a few years by using part of the budget surplus to temporarily bail out the program. Or they can actually fix Medicare.

How to do this? By letting senior citizens buy coverage directly from health plans that compete for their business, just as members of Congress, the White House staff, and other government employees and their dependents-nearly 10 million enrollees in all-do under the Federal Employee Health Benefits Program (FEHBP).

Indeed, Sen. John Breaux, D-La., chairman of the recently disbanded congressional Medicare commission, proposed an overhaul of Medicare that mirrors FEHBP in many respects. But without any support from the White House, the Breaux plan failed to garner the votes necessary to forward a recommendation to Congress. Despite political posturing to the contrary, President Clinton has shown voters he isn't serious about Medicare reform.

That's unfortunate for America's senior citizens and especially the next generation of retirees, because the same type of system that serves Congress and the White House offers the best model for Medicare reform. In fact, some of FEHBP's more attractive features-such as a wider menu of benefits-could help lawmakers negotiate their way more safely around this politically charged issue.

That's because FEHBP gives participants a broad range of choices, usually involving dozens of competing health plans. The benefits are flexible, reflecting market cost and consumer demand. The result? A popular health program that is also financially sound.

Medicare, by contrast, offers an obsolete package of benefits that is frequently held hostage to politics. Any changes to the list of Medicare benefits literally require an act of Congress. And the bureaucracy determines the conditions under which medical services are available to you, defining whether they are "necessary or appropriate" regardless of the best professional judgment of your doctor.

FEHBP is what Medicare would look like had it been designed correctly in the first place. Insurers aren't forced to provide good benefits at a reasonable cost-they do it because they hope to be selected by as many FEHBP enrollees as possible.

Both the General Accounting Office and Congressional Budget Office-the government's own fiscal watchdog agencies-have labeled the White House proposal irresponsible. As the head of the GAO warned the Senate committee responsible for Medicare, the administration's plan "could induce a false sense of complacency."

By postponing the day of reckoning, the president's proposal will make the necessary reforms that much harder to enact. The battle isn't over yet-Sen. Breaux has vowed to keep working for "true, serious reform." But the White House plan may prove attractive to lawmakers seeking an easy solution. Pouring part of the budget surplus into Medicare gives the appearance of keeping the program afloat for a while, but what then?

There's no reason to wait and find out. Lawmakers know FEHBP works. Competition motivates these plans to provide the best service for the best price. That's why Congress has it-and why senior citizens deserve a program like it.

Edwin Feulner is president of The Heritage Foundation (www.heritage.org), a Washington-based public policy research institute.

About the Author

Edwin J. Feulner, Ph.D. Founder, Chairman of the Asian Studies Center, and Chung Ju-yung Fellow
Founder's Office

Related Issues: Health Care