Medicare and premium support: a social work perspective.

Abstract

For more than a decade, conservatives, led by Heritage Foundation, have sought to replace current traditional Medicare, with its defined package of benefits, with a so-called premium support system modeled after Federal Employee Health Benefits Program (FEHBP) (Lieberman, 2001). According to Robert Moffit, director of domestic policy studies at Heritage Foundation, FEHBP provides the personal choice, effective cost control, flexibility, and capacity for innovation that lawmakers should include when they fix broken program (quoted in Heritage Foundation, 2003). The FEHBP provides coverage to some 8 million individuals (U. S. Office of Personnel Management [OPM], 2003). Its members select from among a wide range of plans with varying benefits, and government pays up to 75 percent of weighted premium average of participating plans (U.S. General Accounting Office [GAO], 2002, p. 4). A beneficiary who chooses a higher cost plan must make up difference between value of premium support and cost of plan, whereas an individual who chooses a lower cost plan breaks even or pays a smaller amount (Oberlander, 2000). In theory, this encourages consumers to consider their choices carefully and forces insurers to compete for enrollees by reducing costs. In June 2003 House of Representatives took a major step toward realizing conservative vision by enacting Prescription Drug and Modernization Act of 2003 (H.R. 1), which adds a long-sought prescription drug benefit to Medicare. Included in H.R. 1 is a provision that would require traditional to compete with HMOs and other private plans beginning in 2010. H.R. 1 has gone to a conference committee, which will try to reconcile it with a prescription drug bill enacted by Senate. Whether or not H.R. 1 survives intact, conservatives are clearly committed to turning into a system resembling FEHBR A majority of members of National Bipartisan Commission on Future of (1999) supported a premium-support approach. Representative Bill Thomas (R-CA) (2003), chair of House Ways and Means Committee and a chair of Bipartisan Commission, has expressed strong support for an FEHBP model. In addition, President Bush has pointed to FEHBP as a model for an Enhanced Medicare (Strengthening Medicare,' 2003). MEDICARE AND THE FEHBP In supporting an FEHBP approach for Medicare, conservatives make two points. First, with number of workers in relation to retirees declining and approaching retirement of baby boomers, faces a deepening crisis;' that requires fundamental change (Owcharenko, 2003). Second, only rational way of fixing mess is by reorganizing it along lines of FEHBP, which, largely through consumer choice and real market competition;' has become one of most successful employer-based health insurance programs in world (Owcharenko). Although first point overlooks that does not exist in a vacuum and that its problems reflect a larger crisis in our health care system, it contains an element of truth (Moon, 2003). The number of workers supporting each beneficiary will fall, and Hospital Insurance Trust Fund (Medicare Part A) could run out of funds by 2026 (Centers for and Medicaid Services, 2003). fails to provide benefits included in most plans, most notably prescription drug coverage, and has high cost-sharing requirements (Reinhardt, 2003). Even defenders of traditional acknowledge need for change (Moon, 2003; Oberlander, 2000). The more important question is whether FEHBP has been as successful as its advocates claim and really offers an appropriate model for reforming Medicare. To begin with, FEHBP does not seem quite free-market system conservatives suggest it is. …