Perspective               

Bush Administration Recommends FEHBP Model for Medicare

Bush Administration officials recently told the U.S. House Energy and Commerce Subcommittee on Health that people with Medicare would be better off if Medicare were modeled after the Federal Employees Health Benefits Plan (FEHBP), the program where private insurance plans bid to offer health insurance to federal workers, retirees, and their families. But they omitted the fact that the federal government is not willing to pay anywhere near what it would cost to provide people with this type of health care coverage.

Bobby Jindal, Health and Human Services assistant secretary for planning and evaluation told the subcommittee that President Bush's plan for "strengthening Medicare includes the principles that Medicare's coverage should be improved to give [people with Medicare] the same kind of reliable health care options and access to innovative benefits that all federal employees and many other Americans enjoy." But he excluded the fact that this type of coverage would cost the government billions of dollars it is not prepared to spend. Jindal also noted that "private plans like those offered to federal employees have long been the choice of millions of [people with Medicare]."

But House Democrats pointed out that many private plans, like Medicare HMOs, have raised premiums, cut benefits, or dropped out of the Medicare program all together over the last several years, showing that private plans cannot effectively serve the Medicare market. They also noted that Medicare was created because private plans could not make a profit providing health insurance to older adults or people with disabilities.

Janice La Chance, former director of the U.S. Office of Personnel Management, which runs FEHBP, told the subcommittee in a written statement that Congress should not use FEHBP as a model for Medicare because FEHBP premiums have risen by nearly 50 percent over the last five years, making health insurance unaffordable for many the program is supposed to serve.

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