NCPA - National Center for Policy Analysis


January 2, 2007

Some experts are calling for a national health care market, similar to the Federal Employees Health Benefits Program (FEHBP).  But while the program works for the government, it might not work nationwide and could lead to an even smaller playing field in health care competition, according to the Heartland Institute.

Under the FEHBP:

  • Health insurance premiums will rise an average of 1.8 percent according to the U.S. Office of Personal Management,
  • That is compared to an average increase of 7.7 percent for the average American, according to an annual Kaiser Family Foundation survey released in October.
  • Sixty-three percent of FEHBP employees' premiums will not increase at all, and the 1.8 percent average is the smallest rate increase for federal workers in more than a decade.

But despite the attractiveness, modeling private sector plans on the government one might not see the same results.  According to Devon Herrick, a senior fellow at the National Center for Policy Analysis:

  • One reason why the FEHBP works for the federal government is because they have so much buying power, yet aren't so big that they can take over the whole market.
  • For the most part, federal employees are healthy and tend to be in pretty good shape; and because the group they are underwriting is so large, insurers are able to squeeze the price and make things more affordable.
  • But if the entire country worked that way, it would squeeze the market too much and a lot of the competition would go away.

Health insurers need to be able to create unique products, says Herrick.  That way, people can choose how to spend the money, maximize choice, and ensure that their health care dollars go toward protecting their health, not their insurer's bottom line.

Source: Aricka T. Flowers, "National Market Could Cure America's Health Care Crisis: Policy Analysts," Health Care News, Heartland Institute, January 1, 2007.


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