"Congressional Health Plan" Not Special; Just Group Private Insurance
Fri Jan 11, 2008 at 03:21:59 PM PDT
Following up on my argument yesterday that all Democratic candidate health care reform plans offer no more than partly government subsidized private insurance, similar to Medicare Advantage:
I am absolutely sick of hearing about the wonderful "Congressional Health Plan". We are told again and again how generous it is. And we are told even more often that all that is needed for a perfect universal health care plan is to "open the Congressional Health Plan" to the entire population. Unfortunately, achieving affordable universal care is not this simple.
Somehow, the "Congressional Health Plan" has come to symbolize the best, most lavish health care plan available. In reality, "the Congressional Health Plan" does not exist. Congress' health insurance is provided by the Federal Employees' Health Benefit Plan (FEHBP), which provides health insurance for about four million federal employees and retirees. The size and relative good health of this population makes it easy to obtain comprehensive and relatively inexpensive insurance plans. It costs the employee relatively little because the government pays about 72% of the average premium as an employment benefit (employees choosing more expensive than average plans will pay more; those choosing less expensive policies will pay less).
Moreover, like most other employer sponsored group health insurance plans, the FEHBP is community rated. Those insured pay the same premium regardless of existing illnesses, age sex, occupation, etc. Seemingly, this is the aspect of the plan that the candidates would adopt. Younger and healthier people would pay more than the value of care they consume, while they remain young and healthy. Some older and less healthy people would pay less than the value of services they consume (Many of them would still pay more, however). Health spending is highly concentrated. One percent of the population accounts for 22.5% of spending; five percent of the population accounts for 49% of spending, and ten percent accounts for 64.1%. In contrast, the lowest spending 50% accounts for only 3.1% of spending.
Beyond that, the only difference between the FEHBP and the health plans of other large employers is the bewildering variety of plans. Different plans, each with different benefits and different costs, are offered in each state. There are thirteen plans available anywhere in the nation and a varying number available in different states. The kinds of plans range from traditional indemnity insurance, allowing the beneficiary to see any physician, through various kinds of HMO and PPO, through the "free market friendly" "Consumer Directed" and "High Deductible" Health Plan arrangement. This latter arrangement generally imposes a a deductible of several thousand dollars and facilitates the establishment of a tax-deductible "health savings account" which allows the beneficiary to pay for services before he reaches the deductible. The plans are not required to offer any specific benefits; they need only offer benefits that are "actuarialy equivalent" to the value of their premiums.
As I suggested in yesterday's diary, the health care reform plans of the leading Democratic candidates look very much like privatized universal coverage with a public option--very similar to the insurance company written Medicare Advantage program.
Given the money insurance companies, drug companies and other interested players have to invest in preventing the creation of any "reform" not built on private insurance, can we expect anything else?
Moreover the "public option" fig-leaf suggested by Clinton and Edwards is just that--a fig leaf. The vast marketing muscle of the insurance industry makes that close to a certainty.
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