Effective management of competition in the FEHBP (Federal Employees Health Benefits Program).

Abstract

Prologue: The Federal Employees Health Benefits Program (FEHBP), once regarded as a prototypical example of medical marketplace competition at work, has fallen on difficult times. The program offers federal employees a vast number of health insurance plans that add to administrative costs but contribute little to real competition at the provider level In the process, they give health insurers an incentive to segment the market in ways that make it more difficult for those requiring substantial medical care to purchase it on an affordable basis. In this papery Stanford University professor Alain Enthoven discusses the problems facing the FEHBP and offers a prescription for reform that is relevant not only to the federal program, but to all enterprises that seek to be cost-effective purchasers of health care. For more than a decade, Enthoven has been at the forefront of health policy thinkers who have sought to transform the rhetoric of marketplace competition into a policy agenda. While Republicans and Dem...