As most readers know, the Supreme Court issued a decision upholding the individual mandate in the health care law. The 5-4 decision issued on June 28 requires almost all citizens to carry health insurance or pay the government a tax as the penalty for not buying insurance. (See Supreme Court Upholds Health Care Law)
How Big Will Changes Be in Federal Health Insurance Program?
For most federal employees, there will not be big changes in their federal health insurance. The Office of Personnel Management has already put some of the changes into place and the cost for at least some of these changes has already been absorbed, at least in part, through increases in health insurance premiums. (See Changes to Your Federal Health Care Plan)
There is little doubt that health insurance premiums will continue to go up. Some readers will find this surprising since, as a candidate for president, Barack Obama said: “That’s why my health care plan includes improving information technology, requires coverage for preventive care and pre-existing conditions and lowers health care costs for the typical family by $2,500 a year.”
For those who did not read the fine print or listen closely, or for those who do not carefully scrutinize a candidates’ campaign promises, Senator Obama implied a lower health insurance premium of $2500 a year but did not specifically say that. He apparently concluded (or at least hoped) that by spending $50 billion over five years on electronic medical records and by improving access to proven disease management programs, we would all end up saving money. He used an optimistic analysis to conclude cost reductions in national health care spending could amount to the equivalent of $2,500 for a family of four. It would be an understatement to conclude that economists were skeptical those savings can be achieved, but even if they are eventually achieved, there was no promise that every dollar would be passed on to consumers through lower premiums.
Changes in Your Health Insurance Premiums
No one can predict with certainty what will happen to health insurance premiums but don’t expect a decrease in the near future. The most pessimistic predictions are that health insurance premiums will go up between 19% and 30% for those buying insurance in the market for an individual’s health insurance. But, regardless of whether that happens for some Americans, federal employees or retirees are unlikely to see increases that are as large as others may have to pay. (For more on the topic of health insurance premiums, here is one analysis.)
Health insurance costs for federal employees went up an average of 3.8% for 2012 (See 3.8 Percent Average Health Insurance Increase in 2012) and they also went up, on average, 7.2% in 2011. We do not know what the average increase will be for 2013. Chances are the average increase will be at least 3.5% with enough changes in the program so that readers will be able to save some money by switching plans and, perhaps, decreasing the services covered by insurance.
Those Uninsured Feds
And what about federal employees who are not covered by health insurance? We do not see press releases from the Office of Personnel Management detailing the number of federal employees who do not have health insurance and any figure I have located is an estimate.
Here is one estimate from 2009 from AFGE: ““We estimate there are about 250,000 federal employees who are uninsured. They’re eligible, but they can’t afford the premiums.” So, while we do not have an exact number, there are certainly some federal employees who do not have health insurance coverage, perhaps because they felt they could not afford the insurance or were healthy enough so that they did not feel insurance was necessary.
At least some of these employees will be impacted by the new health care law as they will be required to buy insurance or pay a new tax. And, of course, if they pay the tax, they will presumably still be without health insurance coverage. For those employees who are at the low end of the pay scale, they will probably get some sort of subsidy to cover the cost of the federal employee insurance.
Changing Role of OPM
One other possible impact on federal employees will be the changing role of the Office of Personnel Management. OPM used to be considered the “federal government’s personnel office.” It still is in many respects but that role is changing. OPM plans to sign contracts with health care insurers in fiscal 2013 to provide coverage to millions of uninsured Americans as Obamacare requires OPM to set up multi-state plans on “affordable insurance exchanges.”
This could mean that OPM will now be providing services for millions, perhaps tens of millions, of new clients. How this new job will impact the role of OPM and the services it provides to federal employees and retirees remains to be seen but it is hard to see how it will lead to OPM serving the federal community more efficiently than it does now. Former OPM director Linda Springer has said that OPM is not up to the job and not structured for a task of this magnitude with the result that the agency would be overwhelmed.
Without a doubt, its new role will require resources, people, and time and, for those in the federal community, our best hope is that the services from OPM do not decline.