Senator: Let Seniors Into FEHBP

Ask any 10 Republican policy makers about President Clinton's proposal to let early retirees buy into Medicare and you'll get the same answer back: It's on the right track, but the approach is all wrong. According to the conservative mantra, using Medicare to extend health care coverage would expand a federal bureaucracy that's already bloated and inefficient.

Now, after months of negative reaction, the first serious alternative approach is getting some notice. Sen. John B. Breaux, D-La., chairman of the National Bipartisan Commission on the Future of Medicare, is even walking around with a copy of the counterproposal under his arm.

The new plan--to let people age 62-65 buy into the Federal Employees Health Benefits Program (FEHBP) instead of Medicare--was put forward by David B. Kendall, senior analyst for health care policy at the Progressive Policy Institute, the centrist think tank of the Democratic Leadership Council.

Breaux quickly endorsed the idea. "I've shared and showed it to anyone who's willing to listen," the Louisiana Senator said in an interview. "I asked the President to look at the papers. I am sending it to all of the [Medicare] commission members, to congressional leaders and Members of Congress."

Both Breaux and Kendall praised President Clinton for returning the nation's attention to health care access, but he said the FEHBP would be a better choice than Medicare for covering early retirees. It has restrained costs more successfully than Medicare, they said, because it has created competition between private health plans instead of relying on the "bureaucratic price controls" of Medicare.

Kendall added that the FEHBP also offers a greater variety of health plans, letting participants pick the plan that best suits their needs. Moreover, he argued that the FEHBP plans offer comprehensive benefits, whereas most Medicare recipients end up buying supplemental insurance policies to cover the costs of prescription drugs, co-payments and deductibles.

There are also political reasons Clinton should look at the FEHBP instead of Medicare, Kendall said: If the goal is universal health care coverage, then putting forth a proposal Republicans can't support creates an immediate stumbling block. Clinton's opponents have "already asserted that a Medicare buy-in will lead inexorably to an expansion of Medicare and increased government control of the health system," he said.

Still, the President needs to produce some kind of comprehensive health policy, especially since the Republicans won't, Kendall noted. "Their just-say-no reactions to his proposal contribute to a political vacuum in which extreme ideological positions prevail and gridlock results. By using FEHBP as a model for a competitive system that restrains the public costs of subsidizing health care coverage, the President and Congress could galvanize broad public support and avoid the many pitfalls associated with expanding Medicare."

The Medicare commission is sure to examine the plight of uninsured early retirees this year. In fact, Congress directed it to do so, after proposals to raise Medicare's eligibility age from 65 to 67 nearly passed as part of last year's balanced budget act. The Senate passed the proposals, but the House-Senate conference committee eventually removed it and a couple of equally controversial provisions from the bill. In congressional discussions about adding 65-67-year-olds to the ranks of the uninsured, another issue--that nearly 15 per cent of Americans between the ages of 50 and 65 don't have health insurance--was also brought to light.

Breaux has shown a particular interest in the FEHBP. Last year, he proposed an extensive demonstration project to test the FEHBP approach for Medicare, although that proposal was trimmed to include just a few pilot programs. Meanwhile, Senate Minority Leader Thomas A. Daschle, D-S.D., introduced legislation that would use the FEHBP as a model to insure many Americans.

Kendall says he's also discussed his plan with Christopher Jennings, Clinton's top health care adviser. "There's some disagreement about which system would produce the best price for beneficiaries, but they're looking at it carefully," he said.

Kendall predicts that a buy-in to either Medicare or the FEHBP would attract about 300,000 takers, and that the cost at first would be roughly the same--about $300 per month. But Kendall explains that the FEHBP would be preferable because prices would rise and fall based on the market, while Medicare's prices are harder to adjust.