3in half for almost all employees and retirees. And many HMOs would leave the program as well,as their enrollment dropped in cities and towns all over America.The numbers of employees and retirees affected would be staggering. For example, the MailHandlers Standard option plan enrolls about 150,000 employees and retirees. Only about 10,000of these are postal employees. If this plan went under, all 150,000 Federal employees and retireeswould be forced to change plans. Likewise, the NALC plan enrolls about 120,000 employees andretirees. About 30,000 of these are postal employees. If this plan went under about 120,000employees and retirees would be forced to change plans. In both cases all postal annuitants overthe age of 65 would be forced not only to change plans but also to leave the FEHBP.President Obama has been criticized for promising that under Health Reform all Americanswould be able to stay in their existing health plans. To whatever degree this promise wasexaggerated, the USPS plan, if adopted by the Congress, would make it look like solid gold.
The FEHBP as a Model for Insurance Reform
In my scholarly book,
Putting Medicare Consumers in Charge: Lessons from the FEHBP
, Iconcluded that over the last 50 years the FEHBP has outperformed Medicare in cost control, inservice, in benefit generosity, in fraud prevention, and in protecting enrollees fromcatastrophically high health care expenses.I was not the first to reach these conclusions. Every major Medicare reform proposal of the lastdecade, enacted or not, has been based on the FEHBP model. In 1995 the Heritage Foundationpublished “The FEHBP as a Model for Medicare Reform.” During the Clinton Administrationthe National Bipartisan Commission on the Future of Medicare, otherwise known as the“Breaux/Thomas Commission,” in 1999 endorsed the FEHBP model of consumer choice amongcompeting plans by a majority vote, just short of a super-majority vote. During the recent BushAdministration the Republican-controlled Congress enacted the Medicare Modernization Act in2003, explicitly modeling both the Medicare Advantage program and the Medicare PrescriptionDrug Program (Part D) on the FEHBP. In fact, the MMA requires that in administering theseprograms the Centers for Medicare and Medicaid Services (CMS) use the policies and methodsof the FEHBP.All of the recent reform proposals for Medicare, including the first Ryan plan, the Ryan/Rivlinplan, the Rivlin/Domeneci plan, the Burr/Coburn plan, the Lieberman/Coburn plan, and theRyan/Wyden plan (among others), have attempted to follow even more closely the FEHBPmodel under which all plans (including original Medicare plans) compete on an equal footing toattract enrollees, holding down costs through competition among plans.The Rand/Graham/Lee/Demint plan introduced last week, which would enroll all Medicarebeneficiaries in the FEHBP, would not only follow the FEHBP model, but would explicitly relyon the FEHBP plans to enroll 50 million Medicare beneficiaries in the same risk pool as Federalemployees and retirees. Whatever one’s view of this scheme, the USPS proposal would destroy itas an option.In the present charged political environment, with arguments before the Supreme Court on theindividual mandate even today, I hesitate to mention this, but the Obama Administration’s healthreform law follows the model of the FEHBP in promoting competition among health plans in a