NCPA - National Center for Policy Analysis


October 19, 2006

Choice and competition work in health care.  Some of us are lucky enough to have access to a market driven and shaped by them, says Robert E. Moffit, director of the Center for Health Policy Studies at the Heritage Foundation.

This month, millions of federal workers and retirees, including members of Congress, get to pick and choose their health plans for 2007.  According to the Office of Personnel Management, which runs the civil service, their insurance premiums will rise, on average, just 1.8 percent. About 63 percent of them will see no premium increase at all.

  • These Americans are enrolled in the Federal Employee Health Benefits Program (FEHBP), a consumer-driven system in which many different carriers offer a choice of 284 private plans nationwide. 
  • FEHBP plans include a variety of benefit packages, including health-savings accounts.  Feds get high-quality care at competitive prices. 

The FEHBP isn't the only example where intense competition works, says Moffit.  Another, paradoxically, is Medicare.  The overall cost of the new Medicare drug benefit is a serious problem, but at least drugs are delivered to seniors through competitive private health plans.  The result: lower drug prices.

  • When the drug benefit was enacted, the projected average monthly premium was $37.
  • Now, intense competition among plans has brought this under $24 per month, a 40 percent reduction, accompanied by growing patient satisfaction.

That's what choice and competition can deliver, says Moffit.

Source: Robert E. Moffit, "Competition good for your health (care)," Washington Times, October 19, 2006.


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