Healthcare Town Hall

With the idea of expanding the Federal Employees Health Benefits Program (FEHBP) now in the news, it makes sense to revisit an earlier paper about cost and complexity in health plans, which includes analysis of the most popular FEHBP plan. For example, consider the range of costs among different health plans:

Read the full paper here.

Cost Bob Dobson, complexity, FEHBP, Ron Harris, Tom Snook

The year was 1994. Sen. Edward Kennedy had an idea:

I have felt for years that every American should have the opportunity to have the same health coverage on the same terms as members of Congress and the president. This proposal guarantees that opportunity and also builds on the private sector.

While this idea has been echoed in the years since, it had not yet been a major provision of the reform bills moving through Congress. And so the Federal Employee Health Benefit Program (FEHBP) has largely been left out of the healthcare reform debate…until now.

We’re now making up for lost time as the Senate debate turns to the idea of an FEHBP-like program as an alternative to the public option. Not everyone is enthusiastic about the suggestion that the Federal Office of Personnel (OPM), which oversees FEHBP, should manage such a plan. We expressed our perspective about an FEHBP-type model early last year; many of the same concerns remain today. Here’s an excerpt:

If the FEHBP were made more widely available, it could result in selection problems. People who could find affordable insurance in the commercial market would select those options, leaving the more expensive population to opt for the FEHBP—and thereby making the program more expensive. The FEHBP works when it is restricted to federal employees, but when you open it up to a wider market the program is selected against and the most expensive people buy in.

While there may be lessons to draw from FEHBP in developing some kind of federal coverage for the uninsured, no program will work if it is too expensive. Cost is a barrier to entry for many of the uninsured. Unless plans are made affordable, the uninsured will remain uninsured. With its rich benefits, FEHBP does not seem to be a clear cost fit for the uninsured.

This isn’t the first time we’ve seen anachronisms during this healthcare reform conversation.

Reform FEHBP, public plan, Tom Snook

The head of the White House Office of Healthcare Reform stoked some controversy this week by suggesting that a Medicare-like model is not the only way to go when it comes to a public healthcare option:

There are different breeds of public plans that could be part of this.”

Nancy-Ann DeParle

The response from many organizations has been negative. Still, there are certainly other models. Before the Medicare-like public plan idea gained steam, an FEHBP-type plan was often mentioned. Then there is the Healthy American Act.

Not to mention ideas from overseas. The Dutch system has drawn a lot of attention; see the interview below for more information on that.

A wholesale change seems less likely than something incremental, but perhaps there are things to learn from other countries. Either way, it is simply too early to handicap this race.

For profit, for everyone: Exploring the Dutch healthcare system

The Dutch healthcare system is the world’s only private system of basic healthcare insurance operated by insurance companies for profit. We asked Dutch healthcare actuaries Roeleke Uildriks and Ji Kwen Ng to explain.

Read more…

Economy, Global, Government, Reform, Universal coverage FEHBP, Healthy Americans Act, Ji Kwen Ng, Netherlands, Roeleke Uildriks, Uninsured, Universal coverage

The Wall Street Journal today reported on the impending political showdown over a public healthcare plan. Many existing federal health programs will be referenced as part of this discussion, especially the Federal Employees Health Benefit Program (FEHBP). Milliman Principal Tom Snook provides perspective on lessons learned from this program throughout its five decades of existence.

Milliman has worked with the Federal Employees Health Benefit Program (FEHBP) since its inception in 1960, when Wendell Milliman presented a report to Congress.

We asked Tom Snook for insight on this much-talked-about program.

Q: Many politicians have suggested extending FEHBP to cover populations other than federal workers. Is this viable?

Tom Snook: FEHBP has provided healthcare benefits to federal employees for more than 40 years, so it’s no wonder that many have looked to this program as either a candidate for expansion or as a potential model for universal coverage. But just because FEHBP works in its current context does not mean it can or ought to be used to fix what’s wrong with the current system.

Actuarially speaking, the FEHBP has worked in spite of design issues and inherent inefficiencies that could have prevented success. FEHBP offers federal employees an array of health plan choices, which are provided by the Blue Cross/Blue Shield Association (BCBSA) and by other commercial entities (including Humana, Aetna, Coventry, and various regional HMOs). The choices vary from one location to another, with Washington, D.C. offering the most options since it has the largest concentration of federal employees.

Read more…

Cost, Government, Reform, Universal coverage Blue Cross - Blue Shield, FEHBP, Tom Snook, Universal coverage