NARFE Fears Medicare Changes Could Cut Drug Coverage for Retirees

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NARFE Fears Medicare Changes Could Cut Drug Coverage for Retirees

By Stephen Barr
Washington Post, June 20, 2003

The National Association of Retired Federal Employees has decided to oppose legislation that would revamp the Medicare program, NARFE President Charles L. Fallis has announced.

House and Senate bills would offer the first federal subsidies for prescription drugs to all 40 million Medicare recipients, at a cost of about $400 billion over the next decade.

Many health care analysts think $400 billion will not be enough to create a Medicare drug benefit equivalent to the coverage offered under most plans in the Federal Employees Health Benefits Program. Some versions of the legislation would turn much of the responsibility for providing the drug benefit over to private-sector companies.

Such a change, Fallis warned, could result in inferior FEHBP drug coverage for federal retirees and their families.

"Although the new drug benefit is to be voluntary, we believe it could easily become an incentive for the Federal Employees Health Benefits Program and other employer plans to reduce or eliminate prescription drug coverage currently provided," Fallis said.

"If that occurred, annuitants would be forced to pay an additional monthly premium for a needlessly complex Medicare drug benefit that would be inferior to what is currently available through FEHBP," he said.

The federal employee health program provides health care services to about 9 million Americans and offers prescription drug coverage to employees, retirees and their dependents. The retirees fall into two categories -- those who retired before turning 65 and are not eligible for Medicare and those over 65 and who have both FEHBP and Medicare coverage.

For retirees enrolled in Medicare and a FEHBP fee-for-service plan, there is a coordination of coverage. There is no coverage coordination between FEHBP and private Medicare health maintenance organizations.

NARFE fears that the government's retirees could be split off from federal and postal employees and placed in plans with higher costs or more restrictions on doctors and hospitals, particularly if Congress tries to move Medicare enrollees into private managed-care plans. If FEHBP retirees no longer belonged in the same risk pool as employees, they would likely face higher premiums than they now pay.

About 30 percent of this year's FEHBP premium increase was caused by increased drug costs, according to FEHBP data. The previous year, drug costs represented 37 percent of the premium increase.