President George W. Bush wants to reform Medicare along the same lines as the Federal Employees Health Benefits Program (FEHBP), the choice-driven program that insures 8.3 million federal employees, retirees, their families, and Members of congress. The President and many Members of Congress say not only that such a reform would enable Medicare to absorb the demographic shock of the diverse baby boom generation,^[1] but also that, based on the professional literature and recent survey research, there is strong reason to believe that such a reform would ensure patient satisfaction with health care coverage. For example:

• There is a direct relationship between personal choice of health plans and patient satisfaction.
  An important study published by the Commonwealth Fund in 1997 illustrates how choice of health plan, either managed or fee-for-service, makes for a substantial difference in levels of enrollee satisfaction.^[2] The study found that only 17 percent of patients with managed care and 12 percent with fee-for-service were somewhat or very dissatisfied with their health plan. However, those surveyed who had a choice of health plans, either through their employer offering several options or through their spouse's employer, and those who did not had very different levels of satisfaction. Those with choice were significantly more satisfied.

The data show not only that there is a substantial difference in satisfaction with overall plans between those with choices and those without, but also that those with health plan options are more satisfied with other aspects of their care, including their choice of doctors and the care they received.

• Choice can improve satisfaction with health maintenance organizations (HMOs).
  Whether patients are satisfied with HMO coverage appears to depend on whether or not they have been forced into such coverage. Major research conducted by Ralph Ullman and his colleagues and published in Health Affairs found that among HMO enrollees, "what matters seems to be choice at the time of enrollment, not at the point of service. Further, in the practical application of ranking plans on overall enrolled satisfaction, choice appears to be a more important influence than other factors that may receive attention, including enrollees' health status."^[3]
  
  
• Choice of coverage is very important among Medicare enrollees.
  In a recent survey of Medicare + Choice recipients, 94 percent of respondents said that having a choice in coverage was important, with fully 84 percent saying it was very important to them.^[4]
  
  
• Choice of health plan transcends racial or age categories among the Medicare population.
  For example, according to a recent survey sponsored by the BlueCross BlueShield Association, the Medicare-eligible population was asked to rank the choice of coverage in terms of importance.

The Importance of Choice in Plans:

Overall, how important do you think it is that you have a choice of   
coverage like an HMO provides as part of Medicare?

• Choice of plans in Medicare is important to voters.
  In a survey of likely voters in the 2004 presidential primary to be held in Iowa and New Hampshire, an overwhelming number of both Democrats and Republicans support choice of a managed care option for seniors when it comes to health care for retirees. The question: "Today, the Medicare managed care plan option is not available in all areas. How important is it for seniors to have the choice of a managed care plan option?"^[5]
  
  The results: 50 percent of both Democrats and Republicans in Iowa said it was very important and 28 and 29 percent, respectively, said it was somewhat important.^[6] The results in New Hampshire: 69 percent of Democrats answered very important and 22 percent somewhat important, and 65 percent of Republicans answered very important and 26 percent answered somewhat important.
  
  
• Choice and satisfaction in the FEHBP is greater than other private plans.
  For the 8.3 million federal employees and retirees and their families enrolled in the Federal Employees Health Benefits Program, the situation is very different from both private employment-based health insurance and the traditional Medicare program. Federal employees and retirees can pick and choose from a wide variety of health plans and options. Every enrollee, whether an active employee or a retiree, can choose from at least 12 fee-for-service and preferred provider organization (PPO) plan options nationwide, with an additional number of HMOs varying on a state-by-state basis. According to Kay Coles James, Director of the U.S. Office of Personnel Management, the competing plans in the FEHBP scored significantly higher in "customer satisfaction" than the industry average for private health plans. For FEHBP fee-for-service plans, 78.9 percent registered a "satisfied" rating, while the HMO plans registered a 62.7 percent rating.^[7] The overall industry average was 61.8 percent.^[8]

Conclusion

In the private sector, health plan choice is increasingly valued. According to a 2002 Employer Health Benefits annual survey, 63 percent of all covered workers have a choice of two or more health plans, and 49 percent have a choice of three more health plans.^[9]

Moreover, both the professional literature and recent survey research show that there is a direct relationship between choice and satisfaction. People want choices when it comes to their health care, and this desire to be able to pick better health plans also exists specifically among the Medicare population. Moreover, the value of health plan choice also exists among the voters in key states who have been asked to express opinions about the desirability of choice in the Medicare program.

-Derek Hunter is a research assistant in the Center for Health Policy Studies at The Heritage Foundation.