NCPA - National Center for Policy Analysis

Medicare Reform Proposal Taking Shape

January 7, 1999

The Democratic co-chairman of the 17-member National Bipartisan Commission on the Future of Medicare, along with Republicans on panel, has endorsed the idea of using the Federal Employees Health Benefits Program (FEHBP) as a Medicare model. That system covers nine million people, including members of Congress.

Sen. John B. Breaux (D-La.) Breaux says that under his proposal - - which observers say has the support of another Democratic commissioner, Sen. Bob Kerrey (D-Neb.) -- those eligible for Medicare would still have the option of traditional Medicare coverage, which pays health care providers for each covered medical service.

  • But similar to the FEHBP, each Medicare enrollee would be able to buy private health insurance from a wide range of traditional plans and HMOs, with the option of switching plans once a year.
  • The government would offer a fixed amount of money to pay the insurance premiums, say 90 percent of the average premium of participating health plans in each area, and beneficiaries would pay the remainder -- or could choose more expensive plans and pay higher premiums.
  • Private insurance policies that fill gaps in the traditional program, and Medicare HMOs, would have to cover prescription drugs.
  • The eligibility age for Medicare would be gradually increased from 65 to 67 over a 24-year period starting in 2003.

People age 65 and 66 might be allowed to buy Medicare coverage if they were willing to pay the full, unsubsidized price.

The commission, co-chaired by Rep. Bill Thomas (R-Calif.), is sorting through various proposals to reform the system. Its recommendations are due March 1, 1999.

Source: Robert Pear, "Commission Urges Overhaul of Medicare Payment System," New York Times, January 7, 1999.


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