The FEHBP as a Model for a New Medicare Program

Butler, Stuart M.; Moffit, Robert E.

doi:10.1377/hlthaff.14.4.47

Cited by 37 publications

(16 citation statements)

References 3 publications

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“…These bills have important similarities to reform strategies advocated by academic health economists and other policy analysts. For example, see Enthoven (1988), Aaron and Reischauer (1995), Butler and Moffit (1995) and Dowd et al (1996).…”

Section: Introductionmentioning

confidence: 99%

Price and the health plan choices of retirees

Buchmueller

2006

Journal of Health Economics

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This study analyzes health plan choices of retirees in an employer-sponsored health benefits program that resembles "premium support" models proposed for Medicare. In this program, out-of-pocket premiums depend on when an individual retired and his or her years of service as of that date. Since this price variation is exogenous to unobserved plan attributes and retiree characteristics, it is possible to obtain unbiased premium elasticity estimates. The results indicate a significantly negative effect of premiums. The implied elasticities are at the low end of the range found in previous studies on active employees.

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Section: Introductionmentioning

confidence: 99%

Price and the health plan choices of retirees

Buchmueller

2006

Journal of Health Economics

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“…4 Economists thinking about rising health care spending note that there are only two approaches for slowing its growth: reduce spending on high-cost medical care that produces no benefits, and reduce spending on high-cost care that yields some health benefits but at even higher costs. Along these lines, some have proposed that we need to "ration rationally" to slow spending growth.…”

mentioning

confidence: 99%

The Rise In Health Care Spending And What To Do About It

Thorpe

2005

Health Affairs

121

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Reforms for slowing the growth in health care spending and increasing the value of care have largely focused on insurance-based solutions. Consumer-driven health care represents the most recent example of this approach. However, much of the growth in health care spending over the past twenty years is linked to modifiable population risk factors such as obesity and stress. Rising disease prevalence and new medical treatments account for nearly two-thirds of the rise in spending. To be effective, reforms should focus on health promotion, public health interventions, and the cost-effective use of medical care.O v e r t h e pa s t f i v e y e a r s the cost of health insurance has risen 54 percent.1 This persistent rise has recently been attributed to the low out-ofpocket costs paid by consumers.2 By not knowing the full costs associated with health care, consumers demand more and "overuse" it (moral hazard). The growth in spending has also been linked to the rising use of prescription drugs and new medical innovations and treatments.3 Still others believe that the rise can be traced to the lack of competition in the health care marketplace and have proposed new approaches for health plans to compete on price and outcomes. 4 Economists thinking about rising health care spending note that there are only two approaches for slowing its growth: reduce spending on high-cost medical care that produces no benefits, and reduce spending on high-cost care that yields some health benefits but at even higher costs. Along these lines, some have proposed that we need to "ration rationally" to slow spending growth.5 Although this may be true, this approach ultimately involves some form of rationing and difficult decisions concerning the introduction of new technologies. Proposals to increase patient cost sharing under consumer-driven models are designed to place consumers in the position to make these health care judgments for themselves.With the diagnosis of the problem identified as low consumer cost sharing and rising discretionary use of services, the policy solutions have focused on demand-1 4 3 6 N o v e m b e r / D e c e m b e r 2 0 0 5 R e t h i n k i n g R e f o r m

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“…Being geographically dispersed is a key challenge for the Medicare program's risk adjustment program, even though it is very large. It also may explain why the Federal Em-ployees Health Benefits Program (FEHBP) has been slow to implement formal risk adjustment, despite considerable evidence of biased selection (Price and Mays 1985;Butler and Moffit 1995).…”

Section: Market Power Of Purchasers and Plansmentioning

confidence: 99%

“…Implementing risk adjustment in one region may be infeasible or perceived as unfair without being able to implement risk adjustment in all regions; yet implementing it in all regions is costly. This problem has plagued the FEHBP, which has not implemented formal risk adjustment despite evidence of a long history of serious biased selection (Price and Mays 1985;Butler and Moffit 1995).…”

Section: Market Power Of Purchasers and Plansmentioning

confidence: 99%

Formal Risk Adjustment by Private Employers

Ellis¹

2001

INQUIRY

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This paper explores explanations for why few private employers have adopted formal risk adjustment. The lack of data, challenges of using highly imperfect signals, and absence of market power are not compelling explanations. Alternative strategies that reduce selection problems are clearly important. The central argument is that U.S. health markets are not in equilibrium, but rather are changing rapidly. Since many agents—consumers, employers, health plans, and providers—do not currently demand formal risk adjustment, it is not surprising that adoption has been slow. Recent changes in health plan markets may change the demand and accelerate future adoption.

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The FEHBP as a Model for a New Medicare Program

Cited by 37 publications

References 3 publications

Price and the health plan choices of retirees

Price and the health plan choices of retirees

The Rise In Health Care Spending And What To Do About It

Formal Risk Adjustment by Private Employers

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