Would the GOP reshape Medicare in the form of FEHBP?

In contrasting various voucher or subsidy schemes lately I’ve not mentioned the Federal Employees Health Benefits Plan (FEHBP). It’s the subsidized health insurance program for federal employees, including members of Congress. Do the subsidies keep up with health care costs? Indeed they do, as Uwe Reinhardt explained today,

There is a huge difference in one important aspect between the Medicare program in the Ryan budget plan and the Federal Employee Health Benefit Plan, or F.E.H.B.P., for federal employees and for members of Congress. […]

The federal government’s – that is, taxpayers’ – annual contribution to the premiums paid to competing private insurers by employees and members of Congress would rise in step with the average premiums charged by the private insurers (see Page 1).

These premiums have been rising over time more or less in step with the overall increase in per-capita health spending in this country.

By contrast, under the Ryan plan, the federal contribution toward the purchase of private health insurance by future Medicare beneficiaries would be indexed only to the Consumer Price Index (see Page 2 of the C.B.O. analysis).

To summarize, Rep. Ryan and the House GOP’s plan for Medicare is not like Medicare Part D, is not like the ACA’s exchanges, is not like FEHBP, and is certainly not like Medicare Advantage or anything ever experienced by Medicare beneficiaries. Why? It’s simple. The subsidies in all these programs keep pace with health care costs while those under the House GOP plan would not.


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