The flavor of Medicare
Could a choice of insurance plans save the system?
By Brooks Jackson/CNN
March 17, 1999
WASHINGTON (AllPolitics, March 17) -- Everyday in shopping malls, car dealer, and ice cream stores market forces are at work. Consumers are making choices. It works for ice cream. Could it also work for health care for the elderly?
Some think so. And they point to the system covering federal employees like Kevin Cain. He recently went to work on a congressman's staff. Immediately after starting, he had to choose his health insurance.
Cain had more than 30 options for insurance. When he worked for a law firm he had a choice of exactly one health plan -- take it or leave it.
"The difference is huge with this style of options. It's the options that make all the difference," Cain says.
It's worth taking a look because this system is a model some would use for saving and radically changing Medicare.
It would be like an ice cream store, where plain-vanilla Medicare would compete with dozens of other flavors.
The government would pay more or less the same amount for each person covered no matter what plan they chose. From the customer's point of view, there would be a lot of choices.
Federal employees pick from among 285 private health plans including local HMOs with their own doctors and national plans that will pay any doctor. Some topped off with dental or vision benefits employees can choose.
Many cover every penny of hospital costs. That is much better than Medicare, which pays only 80 percent -- minus big deductibles.
For its workers, the government pays up to 75 percent of the premiums. For Medicare, the government pays 88 percent, but allows much less choice.
Walt Francis writes a consumers guide to the federal system and says it could work for Medicare.
"Things that are a problem in Medicare, for example -- like catastrophic coverage, like prescription drugs -- they've come easily and naturally to this program because the plans, to attract customers, have to offer those things," Francis says.
But not everybody is convinced this plan will work. Far from it.
"We're essentially saying to every senior citizen, 'Here's a voucher. Go find yourself an insurance company.' Now, if you're 65 and in good health, no problem. If you're 89, like my mother, and you've got some problems, maybe you can't buy what you need," Rep. Jim McDermott (D-Washington) warns.
The main attraction of this plan is the promise of savings.
"It turns out when you give employees a choice system, it creates great incentives to keep costs down," Francis says.
The market model could save taxpayers $65 billion over the next 10 years, as estimated by the staff of the National Bipartisan Commission in the Future of Medicare.
McDermott argues: "We have squeezed providers and we have made savings and we have kept the system basically functioning for 30-some years."
Would it work? Medicare recipients average 74-years-old. Average age in the federal system, which includes nearly 3 million retirees, is still only 57.
And there's an income gap too. Half of those old enough to get Medicare have family incomes of less than $19,500 a year. Half of federal workers make at least $41,000
And critics fear healthy seniors would choose private plans, leaving traditional Medicare to pay for the rest.
"Medicare would just become for old, sick people at the end of life. And I don't think that's a good system" McDermott says. "I don't think that's the way I want to treat seniors in this country."
But here's a scoop, most ice cream buyers still choose vanilla. And most federal workers -- in fact, 86 percent of them -- tell Gallup poll-takers they are satisfied with the health plan they've chosen.
For them anyway -- choice is a cool deal.
Wednesday, March 17, 1999
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