Study raises questions about Medicare reform

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Study raises questions about Medicare reform

By Julie Rovner, Reuters Health

May 30, 2003

WASHINGTON - Restructuring Medicare to make it more like the health insurance program that serves federal workers and their families might not cure as many of Medicare's problems as some advocates are asserting, according to a study released Friday.

"Competition alone may not resolve the ongoing dilemma of maintaining comprehensive benefits while controlling spending growth," writes policy analyst Mark Merlis in a study for the Kaiser Family Foundation.

The study examined how the Federal Employee Health Benefits Plans (FEHBP), which provides federal workers and retirees a wide choice of private health insurance options, operates. The study also looked at some of the program's challenges, including rapidly rising premiums in recent years.

FEHBP "has succeeded in offering varying degrees of health plan choice to a large and diverse population," Merlis states in the report. But he noted at a briefing on the study that FEHBP has not solved the problem of providing easily accessible, affordable care, particularly in rural and remote areas.

For example, in the study Merlis looked at Lebanon, Kansas, which is the geographic center of the lower 48 states. He found that of the FEHBP's six plans that claim to offer nationwide coverage, only two had "in-network" primary care physicians located within an hour's drive of the town.

"It's not easy to put together multiple competing networks that would be national in scope," he said.

Responding to the paper, Stuart Butler of the Heritage Foundation, said he is not convinced that Merlis's evidence shows Medicare might be worse off in a more competitive environment. The Heritage Foundation is a longtime proponent of making Medicare more like the federal employee plan.

Unlike Medicare, whose benefits are controlled by Congress, Butler said FEHBP "has a modern benefits package." The package was developed in response to consumer demand and private sector desire to meet that demand.

Butler said such a package of benefits would be an immense help as the first of the estimated 70 million baby boomers become eligible for Medicare in 2010. Baby boomers would see "you pay more if you want new benefits," Butler said.

But Marilyn Moon of the Urban Institute said proponents of a more competitive Medicare have unrealistic expectations.

"You cannot expect that if we make Medicare into an FEHBP-style plan, poof, extra benefits will appear," she said. "If we want prescription drugs in Medicare, we're going to have to pay for them."

Both the U.S. House and U.S. Senate are expected to begin work on Medicare reform proposals in the coming weeks. Republicans in both chambers have looked at the federal employee plan as an element of that reform.