August 7, 2003
By Walton Francis
Members of the House-Senate conference on
Medicare legislation are deciding the future of the Medicare
the issue of competition among health plans, there are significant
differences between the House and Senate bills. Section 241 of the
Medicare Prescription Drug and Modernization Act (H.R. 1), passed
by the House of Representatives, attempts to create a reformed
Medicare system in 2010. The Senate version (S. 1) does not
seriously attempt to provide for a consumer-driven version of
best model for serious Medicare reform is the Federal Employees
Health Benefits Program (FEHBP), the working program that has
covered federal workers and retirees for over four decades. The
explicit objective of Section 241 of the House bill is to re-create
that system for future Medicare beneficiaries. In recent years, the
FEHBP's performance has been increasingly misrepresented, either
directly or by implication, by ardent defenders of the statist
fact, however, the FEHBP has clearly outperformed Medicare. For
Careful analysis of the FEHBP model is particularly
important because in recent years the FEHBP's performance has been
increasingly misrepresented. Upon analysis, studies published by
the Commonwealth Fund, the Kaiser Family Foundation, and Public
Citizen contain such misrepresentations. Interestingly, the actual
data and analysis they present are far less negative than
of Real Reform
Members of Congress can reform Medicare based on the FEHBP
model, but they must build on the best features of the program.
The choice before Congress ultimately is between these two
models--consumer choice or detailed legislative and bureaucratic
control of benefit design, prices, and operational decisions. The
food stamp program has long demonstrated that it is possible to
have a government entitlement that leaves purchasing decisions
almost entirely with consumers rather than legislators or
good fortune, Congress has a successful example of the consumer
choice model in the FEHBP, which meets the health care needs of 9
million federal employees, retirees, and family members. Surely,
Congress can use this model to aid in reforming the Medicare
Walton Francis is a self-employed
economist and policy analyst and has authored the annual
CHECKBOOK's Guide to Health Insurance Plans for Federal Employees
for the past two decades.
Executive Summary: In deciding the future of Medicare, Congressmust choose between consumer choice or legislative and bureaucraticcontrol of benefit design, prices, and operational decisions. Asuccessful example of the consumer choice model already exists: TheFederal Employees Health Benefits Program meets the health careneeds of 9 million federal employees, retirees, and family members,and should be the model for Medicare reform.
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