As Members of Congress consider Medicare reform options, a recurrent issue is the provision of health plan choice for residents of rural areas.

The Rural Policy Research Institute (RUPRI) recently released a comparative analysis of health plan choice in rural areas. While the RUPRI study also looks at choice in metropolitan areas and total health plan choice, it demonstrates the profound differences in the availability of health plan choice among three different models of health insurance:

1. Medicare + Choice Program, Part C of the Medicare program, created by the Balanced Budget Act of 1997;
2. Federal Employees Health Benefits Program (FEHBP), authorized under Chapter 89 of Title 5 of the United States Code, for the coverage of approximately 8.3 million federal employees and retirees and their families; and
3. Private-sector commercial health maintenance organizations (HMOs).

These health plans and the programs that sponsor them operate under very different principles and legal arrangements. Thus, each has its own entirely different dynamics. This has direct relevance to Members of Congress who are considering Medicare reform.

RUPRI examined all three models and compared their availability to residents in rural counties nationwide. In making this comparison, RUPRI researchers looked at FEHBP activity compared to actual availability of plans, as they did in the cases of Medicare + Choice and commercial HMOs.

It is worth noting, in this context, that their measurement of activity in the FEHBP does not necessarily reflect plan availability. For example, if a rural county has members enrolling in three plans, that does not mean there are only three plans available; there may be many more. Total activity reflects the number of plans that were chosen, whereas the number offered could be higher.

How Health Plan Models Compare in Rural Coverage

• Medicare + Choice. Medicare + Choice had no plans available in 91 percent of rural counties, with only one plan available in 7 percent of counties. Choice among multiple plans (two or more) was available in only 2 percent of rural counties.[1]
  
• Commercial HMOs. Commercial HMOs were not available at all in 7 percent of rural counties, and at least one plan was available in 14 percent. Choice among two to nine plans was available in 77 percent of rural counties, while choice among 10 or more plans was available in only 2 percent.[2]
  
• FEHBP. The FEHBP offers choice among 12 nationwide fee-for-service (FFS) and preferred provider organization (PPO) plans and up to 20 HMOs, depending upon geographic location, to all 8.3 million enrollees.[3] RUPRI found that 87 percent of rural counties had six or more health plans available to federal employees and retirees. Thirty percent of rural counties had people enrolled in the FEHBP enrolling in 10 or more different plans.[4] Fifty seven percent had enrollees in from six through nine plans. Eleven percent of rural counties had enrollees in from three through five plans. There were no rural counties without someone enrolled in the FEHBP, and only 2 percent where only one or two plans have enrollees.

Health Care Choice in Rural Areas[5]

Conclusion
The FEHBP model offers the most choice of health plans: 87 percent of rural counties have six or more competing health plans. Thus, the FEHBP offers the greatest number of plans to its members in rural areas. Private sector commercial HMOs, while more widely available than Medicare + Choice, do not offer nearly the amount of health plan choice available to rural residents enrolled in the FEHBP. Medicare + Choice offered the least amount of choice to its participants.