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Beneficiaries willing to leave traditional Medicare and join a private plan would have two options available under the proposal offered March 3 by President George Bush, which the White House says will cost $400 billion over ten years.

In “Enhanced Medicare,” geared toward loosely managed plans such as preferred provider organizations and private FFS plans, seniors would “receive a choice of plans similar to those offered to federal employees and members of Congress through the Federal Employees Health Benefits Program ... regardless of where they live,” according to the White House. A new Medicare Center for Beneficiary Choice would designate “large, multi-state Medicare regions” — an illustrative map shows 10 such regions nationwide — and plans would bid to serve one or more regions.

“Plans would have to accept any Medicare participant willing to enroll regardless of whether the beneficiary lives in a rural or remote area,” the administration explains. “This approach minimizes risk selection and guarantees access for all seniors to these plans, as is the case with FEHBP.”

Enhanced Medicare enrollees would get a more comprehensive drug benefit, elimination of copays on preventive services, and catastrophic coverage. The Part A (hospital) and Part B (physician) deductibles would be combined. Beneficiaries would pay nothing for the first two hospitalizations each year and a reasonable copay for subsequent admissions.

Premiums would vary. Those choosing an average-priced plan for their region would pay the same Part B Medicare premium paid by FFS beneficiaries, raising a question of how large a federal subsidy would be required to induce plans to offer the enhanced benefits package.

The other private plan option is “Medicare Advantage.” This option would be similar to the current Medicare+Choice program, but reimbursements would be determined through competitive bidding among HMOs, rather than set as a fraction of FFS costs. Unlike Enhanced Medicare plans, Medicare Advantage plans could limit their service to particular local markets, rather than large regions.

House Democrats criticized Bush’s offering and reintroduced their plan from last year that would, for a $25 monthly premium, pay 80 percent of prescription drug expenditures for Medicare beneficiaries. The plan would cost at least twice as much as the $400 billion the White House wants to spend, but Rep. Sherrod Brown (OH), senior Commerce Democrat, argued, “When you factor in the bells and whistles of the president’s plan, $400 billion will not buy half [emphasis in original] the coverage available to members of Congress and other federal employees.”