Defense Health Care:

Offering Federal Employees' Health Benefits Program to DOD Beneficiaries

HEHS-98-68: Published: Mar 23, 1998. Publicly Released: Mar 23, 1998.

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Pursuant to a congressional request, GAO reviewed nine bills introduced in the 105th Congress to authorize the Federal Employees Health Benefits Program (FEHBP) for military beneficiaries, focusing on: (1) issues that cut across the various bills, such as potential effects on beneficiary costs, eligibility, and the military health system (MHS) generally; and (2) the bills' key features, highlighting their similarities and differences.

GAO noted that: (1) GAO's analysis of the nine bills show that their different features could affect the numbers of beneficiaries who would be attracted to participate in the FEHBP, total government and beneficiary costs, and MHS operations; (2) FEHBP coverage would likely vary in attractiveness, depending on beneficiaries' current health care costs and military care eligibility and access and their other health care coverage; (3) the various bills' premium-setting and cost-sharing features would affect not only whether beneficiaries' chose to participate but also the Department of Defense's (DOD) potential added costs; (4) most proposals would set military enrollees' premiums separately from the federal FEHBP group's to shield the federal group's premiums should the military group have higher care usage and costs and thus a higher total premium; (5) whether military FEHBP enrollees should be allowed concurrent use of the MHS is both a cost issue and a military readiness issue; (6) allowing concurrent use of FEHBP and DOD care would create a system of overlapping coverage for younger beneficiaries who already have priority access to DOD-funded care through military facilities and civilian providers; (7) but those aged 65 and older, who have lower priority access to military health care, FEHBP would be far less duplicative; (8) prohibiting concurrent DOD and FEHBP care use might enable DOD to more appropriately size its system, facilitate downsizing of unneeded capacity, and thus have savings for use in helping to fund FEHBP enrollment; (9) the size and patient mix of the DOD medical system, however, are also affected by readiness needs; (10) DOD officials have stated that retaining sufficient numbers and an appropriate mix of patients in the DOD system is critical to recruiting, retaining, and training military physicians and support staff for wartime readiness; (11) yet some experts believe that military facilities' current patient mix is not sufficient to ensure physicians' wartime readiness; (12) to better assess a FEHBP option's attractiveness and potential effects on government costs and the MHS's operation, some bills would authorize a test of the program in a few areas of the country; and (13) such sites would include areas with military medical facilities and those far from such facilities and areas where a variety of FEHBP plans and such other health care options as Medicare health maintenance organization's are alternatively available.

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