Ever wish you could just fire your current
health plan and hire a better one? If you worked for Uncle Sam
right now, you could.
About 85 percent of all federal employees, including members of
Congress and the White House staff, are covered under the Federal Employees Health
Benefits Program (FEHBP). Until Dec. 13, each enrolled employee
has the chance to switch from one health-care plan to another.
Comparatively few Americans are able to do that.
The number of health plans available varies from region to region,
but all employees can choose nationally available, as well as local
plans, resulting in up to two dozen competing plans in many areas
of the country. And while making all those choices available, the
FEHBP holds down costs. Next year the average annual premium for
FEHBP plans will increase 7.9 percent. That may seem like a lot,
but keep in mind that private insurance premiums have increased by
more than 10 percent every year since 2000, and there's no reason
not to expect a similar jump next year.
This unique federal program works for three reasons: It provides
consumer choice, encourages competition and engages in
comparatively light regulation. For those reasons, its positive
experience should serve as a general guide for overall health-care
reform at the state and federal level, and particularly Medicare
reform.
The key is to give people direct control of their health-care
dollars in the form of a defined contribution to their health-care
coverage, enabling them to channel their money to the health plan
of their choice, whether conventional insurance or health savings
accounts. All of us should be able to purchase the health plans we
want, without either paying a big tax penalty or running into
outdated federal or state regulatory obstacles.
Giving individuals and families the freedom to make health-care
choices is far superior to forcing them to take whatever corporate
benefits managers decide for them or what the government insists
through Medicaid or Medicare.
In line with the experience of the FEHBP, lawmakers at the state
level also should find ways to reduce unnecessary health-care
regulation, especially price regulation and state-imposed benefit
mandates. Health care is one of the most heavily regulated sectors
of the American economy. Every regulation imposes a cost, and that
cost is borne, sooner or later, by individuals and families. That's
one of several contributing reasons why overall costs are so high
and premiums seem to go up 10 percent or more every year.
Unfortunately, many in Congress and in the state legislatures want
to go in the opposite direction: They want new federal regulations
-- on prescription drugs, for example. Every FEHBP plan today has
drug coverage. Consumers can select their own plans and levels of
coverage. If Congress re-created a Medicare program with the
regulatory regime similar to the FEHBP, drug coverage would be
available and tailored to what people want -- not what government
says they will get, regardless of their personal wants or
needs.
Reform based on the experience of the FEHBP wouldn't solve all our
health-care problems, of course. Lawmakers still need to tackle
tort reform, for example, if they want to improve the environment
in which doctors practice, while holding down costs and improving
the quality of our health care.
Still, a comprehensive health-care reform package, including a
transformation of the Medicare program, based on the best features
of the FEHBP, would be a giant step in the right direction. Real
personal choice would encourage serious competition among health
plans and providers. That's a healthy prospect for those of us who
don't happen to work for the federal government.
Ed Feulner, president of the Heritage Foundation
(heritage.org), a conservative think tank based in
Washington.
COMMENTARY Health Care Reform
Providing Healthy Choices
Dec 2, 2004 2 min read
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