Large Employer Health Plan More Generous than Federal Offerings

September 22, 2008 ( - A new Kaiser Family Foundation analysis finds that seniors will get better coverage from a typical large-employer health policy than the most popular federal employee health offering.

A Kaiser news release said while the Medicare policy (including the drug benefit) would have been worth $10,610 in 2007, the employer PPO plan would have been worth $12,160, and the federal plan, $11,780. The analysis compares the traditional fee-for-service Medicare benefit package, including the drug benefit, with a typical large-employer PPO plan and with the Blue Cross/Blue Shield standard national PPO plan available to federal workers under the Federal Employees Health Benefits Plan, which covers about half of all federal workers.

Kaiser researchers, along with Hewitt Associates representatives, examined the value of Medicare and the other plans for the average senior enrolled in Medicare, as well as for low-, moderate-, and high-cost beneficiaries.

According to the news announcement, in each case, Medicare’s benefit package is less generous than the other plans because:

  • Medicare has comparatively high cost sharing for short hospital stays due to its relatively high inpatient deductible;
  • Medicare does not include a limit on beneficiaries’ out-of-pocket spending (other than for prescription drugs covered under Part D plans);
  • The standard prescription drug benefit offered by private plans under Medicare has a coverage gap, known as the “doughnut hole”; and
  • Medicare does not generally cover dental care for which there is typically some coverage under large employer plans.

As a result, the average senior in 2007 (with $14,270 in total Medicare spending) would have paid 26% of total costs out of pocket under Medicare, but 15% in a typical large-employer plan, and 17% in the federal workers’ plan.

The Hewitt/Kaiser report is available here .