Federal Health Programs:

Comparison of Medicare, the Federal Employees Health Benefits Program, Medicaid, Veterans' Health Services, Department of Defense Health Services, and Indian Health Services

HEHS-98-231R: Published: Aug 7, 1998. Publicly Released: Aug 7, 1998.

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GAO compared the Medicare program with five other federal health programs: the Federal Employees Health Benefits Program (FEHBP); the Medicaid and Department of Veterans' Affairs (VA) health programs; the Department of Defense's (DOD) TRICARE health program; and the Indian Health Service (IHS). GAO also compared key features of these programs, including: (1) administrative structures, including the number of pages of legislation and regulation; (2) benefit design, including benefits covered and out-of-pocket costs to beneficiaries; (3) costs, including per capita costs and growth rates; and (4) patient and provider satisfaction.

GAO noted that: (1) the programs' approaches to financing health care for their eligible populations differ markedly; (2) these differences are generally attributable to the programs' serving different eligible populations and the programs' evolving relatively independently; (3) FEHBP serves as an insurance purchaser by contracting with several hundred private health plans to offer health benefits to nearly 9 million federal employees, retirees, spouses, and dependents; (4) FEHBP administrators negotiate premiums and benefits with participating health plans, but the program does not directly reimburse claims or directly provide health care services; (5) the largest federal health programs, Medicare and Medicaid, have traditionally acted as insurers for their beneficiaries by reimbursing private health care providers for a defined set of health care services; (6) thus, Medicare and Medicaid administrators directly perform or contract for many of the claims handling and health care provider relations responsibilities that private health plans provide for FEHBP; (7) both Medicare and Medicaid, however, have increasingly allowed or required their enrollees to choose alternative benefit packages offered by health maintenance organizations and other private managed care plans FEHBP by serving as insurance purchasers for at least a portion of their enrollees; (8) VA's and IHS' health programs are mainly direct health care providers that own hospitals and other health care facilities and employ or contract directly with physicians and other health care professionals to provide services to eligible beneficiaries; (9) DOD's TRICARE also mainly provides direct health care services but integrates its direct delivery system with private health plans and providers, thereby also serving as an insurance purchaser; (10) these direct care programs' approach involves the federal government's owning and operating a network of health care facilities and managing health care professionals as employees, a distinctly different approach to financing health care than that used by FEHBP, Medicare, or Medicaid; (11) in addition, several federal health programs perform a public role beyond financing health care services for their eligible populations; and (12) these roles include funding or conducting health care research or graduate medical education; providing additional funds to hospitals that serve large populations of low-income people (Medicare and Medicaid); establishing physician and hospital payment systems that are adapted by other federal health programs and private health services; and providing public health services.

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