May 6, 2003

May 6, 2003 | News Releases on Health Care

Health Plan Is Model For Medicare Reform

Washington, May 6, 2003 - Congressional leaders who wish to strengthen and improve America's ailing Medicare program will find "the single most serviceable model" for reform right in their own offices, according to expert testimony given today by the head of the Heritage Foundation's health policy center.

Robert Moffit, director of the conservative think tank's Center for Health Policy Studies, held up a 43-year-old government program-the Federal Employees Health Benefits Program (FEHBP)-as the paradigm for reform. The largest group health insurance program in the world, FEHBP covers 8.3 million federal employees, retirees and their families.

"It's a time-tested, public-private partnership that delivers outstanding benefits at reasonable cost and allows workers and retirees to select the type of coverage best suited to their needs," Moffit said in testimony before the Senate Special Committee on Aging.

Moffit proposed in 1992 that the key features of FEHBP-consumer choice and market competition-be part of broader health-care reform. And in 1994, he first proposed FEHBP be used as a model for Medicare reform.

In today's appearance, Moffit again urged Congress to view the federal program as a useful "roadmap for reform" and suggested it adopt two significant improvements to the FEHBP model to enable it to better serve a seniors-only population:

  • Allow about-to-retire individuals happy with their private coverage to carry their plans with them into retirement, receiving a government contribution to help offset the costs of the private plan. This provision would assure that people could keep the doctors and specialists they've been using well into retirement.
  • Broaden current FEHBP plan options-which include fee-for-service, preferred provider plans and HMOs-to include new consumer-driven options such as medical savings accounts, flexible spending accounts and health reimbursement accounts. "In any case," Moffit said, "retirees should be able to take accumulated funds from these accounts with them into retirement to use as payment for medical services."

Moffit called the FEHBP "a wonderful rarity: a government program with a solid record of success." By offering consumers a variety of choices and control over the type of coverage they select and relying on market discipline to restrain costs, the FEHBP consistently has delivered "high-quality health care within a pluralistic framework," Moffit said.

Today's hearing is the latest in a series held by the Special Committee on Aging to examine current and future problems facing seniors and the Medicare program they rely on for health coverage. Sen. Larry Craig, R-Idaho, chairs the committee.

For more on how Moffit would solve the problems of Medicare, go to

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