Ask the Advisor: Government Health Care Benefits-Possible Standard for Medicare Reform

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Ask the Advisor: Government Health Care Benefits-Possible Standard for Medicare Reform

Why not scrap Medicare in favor of something better? I refer to the cost-effective health plan enjoyed by all Congress. I understand it includes prescription drugs. I've heard it referred to as the Rolls Royce of health care plans.-T.M., Plymouth Meeting, PA

From the editor:
Members of Congress and other government workers enjoy excellent health benefits under the Federal Employees Health Benefits Program (FEHBP). For 2002, these workers were able to select from 11 different health care plans, all offering prescription drug benefits.

The government pays 72% of the average premium but not more than 75%, with the balance deducted from monthly paychecks of Federal employees. This is similar to the percentage the government pays under Medicare. Under Medicare the government pays 75% of the Part B premium and the other 25% monthly premium is deducted from your Social Security check.

Among the health plans, the federal employee share of monthly premiums ranges from a low of $55.58 per month to a high of $354.08 per month. These premiums compare with Medicare Part A hospital insurance and Medicare B doctors' and outpatient services, but they also include prescription drug coverage. Medicare Part B premiums in 2002 are $54 per month. Most Medicare beneficiaries pay nothing for Medicare Part A, but most supplement Medicare, and pay additional premiums for Medigap policies.

The Medicare deductibles in 2002 are $812 for Part A and $100 for Part B. FEHBP deductibles range from $250 to $1,150 (for hospital, doctors, and prescription drug combined).

There is no Medicare Part A hospital co-insurance for the first 60 days. After that Medicare beneficiaries pay $203 per day for the 61st to 90th day in each period and $406 a day for the 91st to 150th day. Hospital inpatient co-insurance in FEHBP ranges from nothing to 35%. Medicare Part B co-insurance is generally about 20%. Under FEHBP the co-insurance ranges from 10% to as much as 35%.

FEHBP drug insurance co-insurance varies depending upon whether the prescription is generic, brand name or a non-formulary drug. Copayments start as low as $5 but co-insurance can be as high as 50%, depending on the plan and the type of drug.

Even under such a system, the biggest problem for Medicare remains the financing. FEHBP plans aren't necessarily that much more cost-efficient. FEHBP costs are rising by double digit rates as well. Premiums rose in 2001 by an average of 13.3%. The Blue Cross standard option, popular with many retirees, rose by 20% for individual coverage. This increase was on top of a 2000 average increase of 10.5% and an increase of 21.2% in Blue Cross standard option.

To read more "Ask The Advisor" questions and answers, click here: http://www.tscl.org/SSandFinanceQA.asp.

May 2002