Rethinking Medicare

The House and Senate have begun drafting prescription drug legislation to be incorporated into the Medicare program. Interestingly, many experts have come out in favor of structuring this reform on the Federal Employees Health Benefits (FEHB) program, which is a mistake.

Sen. Larry Craig (R-Idaho), chairman of the Senate Special Committee on Aging, is a staunch supporter of this approach and has praised President Bush for proposing it.

Joseph Antos, an employee of the American Enterprise Institute, a right-wing think tank, said at a recent hearing held by the committee that the FEHB program offers a model "to improve and strengthen Medicare so that it can meet the changing needs of seniors and the disabled, now and in the future."

Similarly, Robert Moffit of the Heritage Foundation, another right-wing think tank, testified that the FEHB program has proven itself. "It is older than Medicare, Medicaid and most private-sector plans and employment-based managed care arrangements," said Moffit, director of the foundation's Center for Health Policy Studies.

It is puzzling why the Republican right wing has suddenly become enamored with the FEHB program. Their testimony suggests that this program would work if incorporated into Medicare, because as in the private sector, participants are free to choose from a variety of health care benefits options. However, this overlooks the glaringly obvious fact that the Medicare population is vastly different from the federal employee workforce.

The federal employee workforce is composed of a broad cross-section of the American population. Feds differ widely in age, sex and health status. Because of those differences, feds enrolling in a particular health plan are disparate, and it is precisely this disparity that enables each plan to maintain its premiums at reasonable levels.

However, Medicare beneficiaries are all senior citizens who have greater health care needs. In order for a health insurance program to work properly, you must have participants whose needs for medical care vary considerably. You have that kind of diversity in the federal workforce, but that is not true for Medicare beneficiaries, who need more medical care and prescription drugs.

Attempting to make a new Medicare prescription drug program resemble the FEHB program is an exercise in futility and is doomed to failure. Although these think-tank mavens are highly intelligent people, they have apparently been blinded by their ideology.

What worries me is that these guys might try to tamper with the FEHB program to the detriment of federal employees.

Fortunately, despite support for an FEHB model for Medicare, Congress doesn't appear to be leaning in this direction. The House Ways and Means Committee is said to be working from a model it passed in 2002, while the Senate is pursuing a different approach. We can only hope.

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at


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