Federal employee organizations expressed opposition Monday to a congressional proposal that would make medical savings accounts available to federal workers under the Federal Employees Health Benefits Program.
Representatives from the National Treasury Employees Union and the National Association of Retired Federal Employees described the bill (H.R. 3166) as "unnecessary and unwanted" at an informational hearing hosted by bill co-sponsor Rep. Mike Pappas, R-N.J.
"It throws off the basic way that insurance is able to maintain costs that are affordable to everyone," NTEU Legislative Director Maureen Gillman said Tuesday.
Rep. Dan Burton, R-Ind., introduced the bill in February so "federal employees and their families will have the opportunity to take control over their health care dollars by choosing their own doctors."
Medical savings accounts are individual accounts used to pay for health care combined with high-deductible, catastrophic health insurance that pays for major health expenses.
Beneficiaries chose their own physicians and pay all medical bills up to the deductible with the MSA and out-of-pocket funds. Catastrophic insurance pays all expenses above the deductible.
Contributions to MSAs and interest on the accounts are tax-free, and any money left in the fund at the end of the year can, after taxes, be used for non-health related expenses.
Burton's bill would include deductible limits identical to those in the private sector: $1,500-$2,250 for individual coverage with an out-of-pocket cap on expenses of no more than $3,000 and $3,000-$4,000 for family coverage with an annual out-of-pocket cap on expenses of no more than $5,500.
Under Burton's plan, MSAs would be available to all FEHBP program enrollees, including active workers, dependents and annuitants, at the beginning of 1999.
But NTEU and NARFE are concerned that if the federal government offers MSAs, an "adverse selection problem" will occur.
In this situation those who do not use health care often would leave the traditional health plans and choose an MSA in hopes of receiving the leftover balance at the end of the year. After losing too many customers, traditional plans would be forced to increase premiums or reduce benefits, NARFE's legislative director Dan Adcock said.
Also, people who perceive their MSA balances as "their money" are more likely to delay seeing a physician at the onset of a health problem, which could lead to more serious and costly complications, Adcock said.
"Certainly, we all support good, affordable health care being available to all Americans, but we don't believe expanding MSA-catastrophic plans into the FEHBP is the answer," NARFE New Jersey Federation President Sam Girson said.
The bill is currently being reviewed by the House Committee on Government Reform and Oversight.
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