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Picking A Health Plan: A Privilege Or A Pain?

Social Issues


Anthony P. Sessa, an employee-training expert in Philadelphia, and Chuck Hummel, a Dallas engineer, get to shop for medical coverage every year. As federal workers, Hummel and Sessa can choose among a dozen or more local insurers or health-maintenance organizations (HMOs). The result? Depends which person you ask.

Sessa, 57, sees each fall's "open season" as a chance to control how he spends his money. Sessa and his wife first switched to an HMO eight years ago, then changed in 1989 to a different HMO--the Health Insurance Plan/Rutgers--to save $28 a month in premiums. "I knew I could get about the same type of health care for less money," says Sessa, chief of a training center of

the Office of Personnel Management.

For Hummel, the plethora of choices under the Federal Employees Health Benefits Program (FEHBP) has led to frustration. The 34-year-old Hummel, who works for the Internal Revenue Service, considered changing insurers last fall but gave up when he couldn't figure out which plans included the doctors he liked. "If you don't have anyone's experience to go by, it's almost impossible to judge between plans," Hummel says. Since 1983, he and his family have stayed with the Government Employees Hospital Assn., an employee-owned insurer.

INCHING UP. Enjoyable or frustrating, consumer shopping has had one big benefit: It has held down health-care costs. Premiums for the FEHBP, which are shared by the government and its workers, have risen at a 10.8% annual rate since 1980--far less than the 14.4% premium increase faced by private employers. And competition for enrollment has forced some 20 insurers and 370 HMOs to control costs without sacrificing service.

Managed-competition advocates applaud the FEHBP but would change three features: They would require plans to offer standardized benefits. Plans should also publish quality data. That way, consumers could shop on price and quality--not on which plan covers braces or eyeglasses. In addition, advocates would pay more to plans that attract older, sicker consumers. In the FEHBP, retirees tend to cluster in a few plans, driving up costs.

Despite its flaws, the FEHBP "offers solid evidence that the market can work, even in health care," says Alain C. Enthoven, the Stanford University economist who developed the idea of managed competition. If President Clinton agrees, more Americans will gain the opportunity to shop for the plan that suits them best.Mike McNamee in Washington, with Joseph Weber in Philadelphia and Wendy Zellner in Dallas

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