The Daily Item, Sunbury, PA

The Rave

August 21, 2012

Benefits program could be model for rest of us

Those looking for a model on which to base reforms for Medicare and government-sponsored health care insurance generally need look no further than the coverage provided to members of Congress and other federal employees.

The Federal Employees Health Benefits program employs a novel mechanism to encourage workers to choose plans carefully based on value, while using competition to entice plan providers to find cost-effective benefits to attract customers. Under the plan, the government pays its employer share of premium costs based on an average premium amount. Workers who want more expensive coverage must foot the additional cost themselves.

The approach is one that Republican vice presidential candidate Paul Ryan and others have tried to adapt for Medicare reform. Many members of Congress have supported the approach. They say it provides a means for controlling Medicare costs in the future without tampering with the Medicare plan for current beneficiaries.

Competitive forces have successfully allowed the Federal Employees Health Benefits program to control costs while providing insurance at premium costs for employees comparable to those of other providers in the private sector.

While federal employees pay roughly the same as average workers, the government contributes less in employer share. The total premium cost in the federal employees plan, then, is less expensive than most plans nationally.

Under the Ryan plan, the federal government will provide a "voucher" or subsidy to citizens 65 and older, equivalent to the premium of either the second-least expensive plan or Medicare -- depending on which is less costly.

Individuals who purchase the least expensive available plan will be able to keep the portion of the unused subsidy; those who wish to purchase more expensive plans must make up the difference in pricing through an out-of-pocket payment.

There are questions about how well the federal employees' plan, which serves people of working age, would control costs if employed on an elderly population requiring more expensive benefits. Any effort to use the plan's average premium model on Medicare must include protections for the consumer.

Members of Congress are in a healthy position when it comes to covering the cost of their government-sponsored medical insurance, thanks to the $174,000 tax-funded salary they are paid each year. They ought to make sure the American people are in a position to enjoy medical care coverage equal to their own.

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