GovernmentExecutive.com

Last year, President Bush's now-stalled campaign to rework Social Security looked to a federal employee benefit -- the Thrift Savings Plan -- as a model for privatized retirement accounts.

The federal employee 401(k)-style retirement savings plan, Bush said, has everything private citizens could want in a personal retirement account: centralized administrative functions to reduce costs, a competitive bidding process to hire private investment managers and easily adjustable allocations.

Federal employees' salaries are rarely the subject of envy, but their benefits are something to covet, at least according to political players. In addition to the TSP, now government health care benefits have become a talking point for congressional candidates.

In a number of competitive races for the 2006 midterm elections, candidates are pointing to the Federal Employees Health Benefits Program as a model solution to yet another seemingly intractable domestic problem: health care.

Amy Klobuchar, a Democrat who is running for Senate in Minnesota in what is viewed to be one of the most highly competitive races in the country -- against fellow Democrat Ford Bell in the primary and Republican Mark Kennedy if she advances to the general election in November -- touted the FEHBP and proposed expanding it to nonfederal employees.

"The Federal Employees Health Benefits Program offers a choice of plans to more than 8 million federal employees and their dependents, including Congress," Klobuchar said in a January speech at the Minnesota state capitol, in advance of Bush's State of the Union speech. "I favor immediately allowing small businesses, self-employed people and others to buy affordable health insurance through the same health care plan that covers members of Congress."

Kennedy used Klobuchar's plan as a tool to campaign against her, citing a Heritage Foundation report that found the annual health care subsidy for federal employees in 2006 is $3,618.68 for a single person and $8,218.08 for families. Extrapolating from those numbers, Kennedy estimated a $1.6 trillion cost over 10 years if everyone entered the FEHBP.

"Amy Klobuchar has advocated opening the federal employee health care plan to everyone," Kennedy said in a press release. That plan is "bad for Minnesota taxpayers, bad for the Minnesota economy, and bad for Minnesota families, but the massive tax increases needed to pay for her plan are even worse medicine."

But Klobuchar is not the only one who thinks FEHBP is a model program.

Missouri Senate candidate Claire McCaskill, a Democrat who is campaigning against Republican incumbent Jim Talent, says the federal program could be used as a basis for providing small businesses with a health care option.

"Claire proposes a plan for small employers modeled off the successful federal health benefits program," said a position point on McCaskill's Web site. "Small businesses could band together for lower health care prices negotiated by the Office of Personnel Management, which has a proven track record of low overhead costs."

Joe Sulzer, a Democrat from Ohio, backs the idea of allowing the government to negotiate health care for everyone, like it does for the FEHBP.

"If you work full time, then you and your family would be eligible for this program," Sulzer said. "You would be able to choose from several private providers at a lower price. Ultimately, this plan would ease the financial burden on both employers and families."

Bill Gluba, a candidate for an Iowa House seat, links to Title 5, the public law that governs federal employee workplace rules, on his Web site, in an effort to promote the idea that every citizen should get "the same quality health care as members of Congress."

Congressional participation in the FEHBP may give it an air of credence to these would-be representatives, but while enrollment is an option for members, it's not always one they take. When Rep. Patrick Kennedy, D-R.I., recently spent a month in rehab at the elite Mayo Clinic, he used a private medical insurance policy to pay for it, The New York Times reported.

COMMENTS

• Going back to "Personal Finances 101," the intent of Social Security is to be one of the three “legs” of retirement income for Americans; with savings and business retirement funds (now mostly 401(k) plans) being the other two. Under the current system, these each depend on separate sources for funding, allowing a wobbly if not totally stable financial position should any one leg fail. Sometimes old adages are repeated due to their truth, and my first thought is: “Never put all your eggs in one basket.” Should Social Security be switched to a market based plan, such as the TSP, a market failure would be catastrophic not only to that fund but also, potentially, to any participant of 401(k)s or the TSP; thereby knocking two of the three legs out from under those dependent on them. Not only would the general civilian population suffer, so would the Defense Department civilians depending on both the TSP and Social Security. Additionally many people, unfortunately, consider their TSP or 401(k) to be that third leg, their savings. Tip off. GovExec.com reader Posted November 28, 2006 9:19 AM
• Rep. Patrick Kennedy, D-R.I., was at the Mayo Clinic for substance abuse treatment. I think that kind of treatment is not generally paid for by FEHBP policies. Perhaps Rep. Kennedy has a FEHBP policy and private insurance. It seems unlikely that Congress would force employers to offer FEHBP participation because the employer has to pay part of the premium. The candidate Republican Mark Kennedy makes it seem like taxpayers have to pay the $1.6 trillion (if one believes that number). Employers would pay that amount and they would only do so if they were getting a better deal than private insurance. This would be revenue neutral and neutral or beneficial to consumers. On the other hand, we civil servants should be concerned that opening the program to anyone would ruin a good deal for us. I'm, no economist, so I don’t have a guess as to whether increased participation would be beneficial or detrimental to civil service. Gregg Wagener Posted June 8, 2006 10:56 AM
• The Federal Thrift Savings Plan is a great program, but should logically only be used only as a model for retirement savings in addition to current hard earned Social Security benefits. Federal employees’ retirement includes the Thrift Savings Plan, Social Security benefits, and a pension based on years of public service. To replace Social Security with higher-risk options available in the Thrift Savings Plan could result in harm to hard working Americans. GovExec.com reader Posted June 9, 2006 9:25 AM