3.3.13: FEHB Program
Pilot premium support through FEHB Program. Other Information:
(Saves $2 billion in 2015, $18 billion through 2020) The Commission recommends transforming the Federal Employees Health Benefits
(FEHB) program into a defined contribution premium support plan that offers federal employees a fixed subsidy that grows by
no more than GDP plus 1 percent each year. For federal retirees, this subsidy could be used to pay a portion of the Medicare
premium. In addition to saving money, this has the added benefit of providing real-world experience with premium support.
Several Commissioners support transforming Medicare into a “premium support” system – such as one proposed by Representative
Paul Ryan and Alice Rivlin – that offers seniors a fixed subsidy (adjusted by geographic area and by individual health risk)
to purchase health coverage from competing insurers. A voucher or subsidy system holds significant promise of controlling
costs, but also carries serious potential risks. To assess the balance of benefits and risks, we recommend a rigorous external
review process to study the outcomes of the FEHB premium support program to determine its effects on costs, health care utilization,
and health outcomes. Although the population covered by FEHB is different from the Medicare population, if this type of premium
support model successfully holds down costs without hindering quality of care in FEHB program, that experience would be useful
in considering a premium support program for Medicare.
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