	Background

		The Federal Employees Health Benefits Program

FEHBP is available to federal employees, retirees, annuitants, and their dependents. See appendix III for a historical comparison of DOD and FEHBP beneficiary numbers and program costs. The issues include (1) who would be eligible and, among those, how many might be attracted to FEHBP and might choose to enroll; (2) how premiums would be set and what the cost-sharing arrangement would be; (3) whether FEHBP enrollees would be prohibited from also using military health care; and (4) whether the FEHBP option should be tested before deciding on nationwide implementation. Many of the bills would provide eligibility only for Medicare-eligible beneficiaries aged 65 and older—approximately 1.3 million retirees, dependents, and survivors.The Military Coalition, an alliance of beneficiary associations including The Retired Officers’ Association and the National Military Family Association, favors this approach as responding to the immediate needs of persons with declining direct care system access and as a way to reduce the option’s price tag. FEHBP would likely be more attractive and beneficial to Medicare-eligible beneficiaries, who also may have alternative health care choices but find them less comprehensive and more costly than FEHBP. Despite past studies showing higher health care use by military beneficiaries than the civilian population, OPM believes that the initial military premiums would not be markedly different from the federal pool and that future use by military FEHBP enrollees, because of the premium and copayment effects on usage patterns, would approximate that of the federal pool. Potential Concurrent Use of FEHBP and Military Health Care

Another key issue is whether military FEHBP participants would also be allowed to continue using military facilities on a space-available basis or enroll in TRICARE or both. Allowing concurrent FEHBP and DOD care use also has DOD sizing and readiness implications. Should many current DOD care users switch to FEHBP, prohibiting concurrent use would allow DOD to downsize or close additional military facilities to help fund FEHBP costs. As it is, DOD’s $15.6 billion annual MHS appropriation is not sufficient to fund care for all DOD-eligible beneficiaries; it will fund only those now using the system. Health care use and choices tend to be relatively local and, thus, a test with too few localities and types of health care options could have results that would not be replicated across the country. The Bills in the 105th Congress

We reviewed nine bills introduced in the 105th Congress that would authorize enrollment in FEHBP plans for selected military beneficiary groups. In this appendix, we provide our detailed analysis of each bill, including eligibility and premium-sharing provisions, whether concurrent use of DOD health care is allowed, and the implications for MHS operations and beneficiary costs. Finally, the bill requires an extensive evaluation to measure participation, out-of-pocket costs, and overall government costs, as well as an analysis of the program’s effects on the military health care system’s cost and access and use rates. Thus, all other areas in the continental United States would be possible test sites. III.2). 7, 1996).
Why GAO Did This Study

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.

What GAO Found

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.