2.) Today’s Medicare Program

The elements of restructuring of Medicare as proposed by the President and Breaux-Frist are best understood in light of Medicare’s current structure. From the perspective of the program’s benefit package, most beneficiaries have two broad choices: they can receive health care coverage through Medicare’s traditional fee-for-service program or through its managed care component, called Medicare+Choice. Differences Between Traditional Medicare and Medicare+Choice

The choice between traditional Medicare and a Medicare+Choice plan typically involves certain trade-offs related to selection of providers, services covered, and out-of-pocket costs. President’s Plan and Breaux-Frist Proposal: Two Versions of Competitive Premium Approach

the President’s Plan And The Breaux-Frist Proposal Are Similar In Three Key Areas But Contain Two Major Differences. To Varying Degrees, Both Proposals introduce a competitive premium model, similar in concept to the Federal Employees Health Benefit Program (FEHBP), to achieve cost efficiencies; preserve the traditional fee-for-service Medicare program with enhanced opportunities to adopt prudent purchasing strategies; and modernize Medicare’s benefit package by making coverage available for prescription drug and catastrophic Medicare costs. The proposals differ, however, in the extent to which traditional Medicare could face competitive pressure from private plans. In addition, under the President’s plan, the Health Care Financing Administration (HCFA) would administer the program, whereas under the Breaux-Frist proposal, an independent Medicare board would perform that function. 4.) 5.)
Why GAO Did This Study

Pursuant to a congressional request, GAO discussed two leading proposals on Medicare reform: (1) the President's Plan to Modernize and Strengthen Medicare for the 21st Century; and (2) S. 1895, entitled the Medicare Preservation and Improvement Act of 1999, which is commonly referred to as the Breax-Frist proposal.

What GAO Found

GAO noted that: (1) the elements of restructuring of Medicare as proposed by the President and Breaux-Frist are best understood in light of Medicare's current structure; (2) from the perspective of the program's benefit package, most beneficiaries have two broad choices: they can receive health care coverage through Medicare's traditional fee-for-service program or through its managed care component, called Medicare Choice; (3) the choice between traditional Medicare and a Medicare Choice plan typically involves certain trade-offs related to selection of providers, services covered, and out-of-pocket costs; (4) the President's plan and the Breaux-Frist proposal are similar in three key areas but contain two major differences; (5) to varying degrees, both proposals: (a) introduce a competitive premium model, similar in concept to the Federal Employees Health Benefit Program, to achieve cost efficiencies; (b) preserve the traditional fee-for-service Medicare program with enhanced opportunities to adopt prudent purchasing strategies; and (c) modernize Medicare's benefit package by making coverage available for prescription drug and catastrophic Medicare costs; (6) the proposals differ, however, in the extent to which traditional Medicare could face competitive pressure from private plans; and (7) under the President's plan, the Health Care Financing Administration would administer the program, whereas under the Breaux-Frist proposal, an independent Medicare board would perform that function.