Medicare and premium support: a social work perspective.

For more than a decade, conservatives, led by the Heritage Foundation, have sought to replace the current traditional Medicare, with its defined package of benefits, with a so-called premium support system modeled after the Federal Employee Health Benefits Program (FEHBP) (Lieberman, 2001). According to Robert Moffit, the director of domestic policy studies at the Heritage Foundation, the FEHBP provides "the personal choice, effective cost control, flexibility, and capacity for innovation that lawmakers should include when they fix the broken Medicare 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 the government pays up to 75 percent of the "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 the difference between the value of the premium support and the cost of the 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 the House of Representatives took a major step toward realizing the conservative vision by enacting the Medicare 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 Medicare 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 the Senate. Whether or not H.R. 1 survives intact, conservatives are clearly committed to turning Medicare into a system resembling the FEHBR A majority of the members of the National Bipartisan Commission on the Future of Medicare (1999) supported a premium-support approach. Representative Bill Thomas (R-CA) (2003), chair of the House Ways and Means Committee and a chair of the Bipartisan Commission, has expressed strong support for an FEHBP model. In addition, President Bush has pointed to the 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 the number of workers in relation to retirees declining and the approaching retirement of the baby boomers, Medicare faces a "deepening crisis;' that requires fundamental change (Owcharenko, 2003). Second, the only rational way of "fixing the Medicare mess" is by reorganizing it along the lines of the FEHBP, which, largely through consumer choice and "real market competition;' has become "one of the most successful employer-based health insurance programs in the world" (Owcharenko). Although the first point overlooks that Medicare 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 Medicare beneficiary will fall, and the Hospital Insurance Trust Fund (Medicare Part A) could run out of funds by 2026 (Centers for Medicare and Medicaid Services, 2003). Medicare 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 Medicare acknowledge the need for change (Moon, 2003; Oberlander, 2000). The more important question is whether the FEHBP has been as successful as its advocates claim and really offers an appropriate model for reforming Medicare. To begin with, the FEHBP does not seem quite the free-market system conservatives suggest it is. …