Brave New World of Health Insurance

Changes are coming to the nation’s health insurance system. How will federal employees be impacted? There are numerous options but no final answers.

Much of the debate about the new national health care program has been of little interest to federal employees who are already covered by the Federal Employee Health Benefits Program (FEHBP). While there have been some changes to the health insurance offered to federal employees as a result of the new health care law, most of those covered have not experienced any major disruptions although the premiums have continued to go up.

There has been controversy about whether those in Congress and Congressional employees will continue to be covered by the existing federal program that is offered to federal employees.

A provision of the health care law known as the Grassley amendment requires members of Congress and their staffs to obtain their own health insurance through the exchanges. The amendment gives the authors of the law a personal stake in the success of the plans to be provided through the new exchanges. It appears that the real issue is whether the government’s contributions in the current health plan for those working on Capitol Hill can be applied to health insurance coverage through the exchanges. Under FEHBP, the government’s share of premiums is set at 72% of the weighted average premium of all plans in the program.

There is still little information about the actual impact of the new insurance law. A Wall Street Journal analysis published this week concluded that “Healthy consumers could see insurance rates double or even triple when they look for individual coverage under the federal health law later this year, while the premiums paid by sicker people are set to become more affordable….”

Insurance under the FEHBP will certainly not go up as projected in the Journal article, in part because the insurance offered under the federal employee system is much more extensive than many of the barebones plans used primarily for catastrophic coverage by some plans used in the private sector. While we do not know what changes we will see in the rates for health insurance under the federal employee plan for 2014, we are likely to see increases in the cost of many of the plans.

There is also some sentiment to put federal employees into the insurance exchanges instead of the current system of health care coverage. As noted in a Forbes column: “[E]ven more federal employees should be required to enroll in the exchanges, especially those at the White House and the Department of Health and Human Services who are writing thousands of pages of exchange regulations…It’s critical that those who design our laws get to experience them for themselves.”

Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, has introduced a bill that would do just that. The bill is short and to the point. HR 1780 reads: “To provide that the only health plans that the Federal Government may make available to the President, Vice President, Members of Congress, and Federal employees are those created under the Patient Protection and Affordable Care Act or offered through a health insurance exchange.”

“If the ObamaCare exchanges are good enough for the hardworking Americans and small businesses the law claims to help, then they should be good enough for the president, vice president, Congress and federal employees,” according to Congressman Camp’s office.

The bill has 16 co-sponsors and has been referred to the Subcommittee on Health where it may quietly reside until it dies.

The chances of this bill being signed into law are slight although, if Congressional representatives and their staffs are ultimately removed from the federal employees’ health insurance program, there will be a greater likelihood of similar action being taken for federal employees as well.

The often staid and boring topic of health insurance has been undergoing major changes since 2008 and we still do not know how the changes will ultimately impact the federal workforce. The new health insurance law is generally unpopular and efforts to move federal employees into the insurance exchanges are likely to be around for some time. It is also likely that efforts will be made to move federal retirees away from the current federal health insurance program and into the Medicare system which is often done in private companies as a cost-saving device. In fact, way back in 2010, the Office of Personnel Management wrote: “We are encouraging the development of pilot programs that improve the value of coverage for annuitants through improved benefits coordination between FEHB and Medicare Part B. At present, plans effectively waive their cost sharing requirements for enrollees with Medicare Part B, which means Medicare/FEHB members typically receive first dollar (100%) coverage for many services.”

In the annual “call letter” to insurance carriers for 2014, OPM wrote: “OPM is encouraging proposals for pilot programs where participating carriers offer a sub-option for Medicare eligible annuitants as an alternate choice.”

So far at least, the emphasis has been on using Medicare as an alternate choice for federal retirees.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47