Clinton’s health plan unlikely to affect feds’ premiums

Opening the federal employee health program to uninsured Americans as proposed by Democratic presidential candidate Hillary Clinton would be unlikely to affect premiums or coverage for government workers, analysts say.

Under Clinton's proposal, a separate risk pool would be created for members of the public who joined the Federal Employees Health Benefits Program, the candidate's campaign staff told a federal employee union during a briefing.

"We specifically asked whether the senator's plan would establish a separate risk pool for any enrollees from outside the federal government community and we were assured that it does," said Colleen Kelley, president of the National Treasury Employees Union. "With a separate risk pool, current federal employees and retirees will remain unaffected, and FEHBP will continue as the high-value program it is today."

The Clinton campaign did not return a call seeking confirmation.

The creation of a separate risk pool is a key point for federal employee groups, many of which expressed concern that without a separation, premiums could rise sharply as sicker and less financially secure participants enrolled in FEHBP-run programs.

One strength of the federal program is its risk pool, said John Palguta, vice president for policy at the Partnership for Public Service.

"Federal employees are fairly healthy, and economically, they're well situated," he said. "Poor people, unfortunately, are not as healthy, for a variety of reasons. If the risk pool changes, the [healthy] people who are underwriting a program have to cover costs" incurred by sicker pool members.

Dan Adcock, assistant legislative director of the National Active and Retired Federal Employees Association, said his group would be opposed to any plan that doesn't establish a separate risk pool for nonfederal enrollees. "We would hate to see it become the insurer of last resort," he said.

Yale University health care economist Jacob Hacker said it was likely that insurers who currently participate in FEHBP would have flexibility in terms of the plans they offered.

"Presumably, while the FEHBP framework would be used, insurers would be able to offer a separate set of plans to those enrolled who were not federal employees -- or not participate in the new nonfederal employee pool at all," said Hacker, who consulted with Clinton and her major Democratic rivals on their health plans. "In addition to employers' contributions, there would be subsidies provided by the government to those with middle and lower incomes."

But even if Clinton's plan would not affect federal coverage or premiums, some federal employee groups questioned the wisdom of using the plan as a model, and said it needed further reform.

"Using FEHBP as an answer to what's wrong with health care in America is ridiculous," said Jacque Simon, director of public policy for the American Federation of Government Employees. "What's wrong with health care in America pervades FEHBP."

Simon noted that FEHBP isn't held to the government's regular accounting standards. "There's no way for us to ever be able to know that Blue Cross Blue Shield [which covers the largest number of federal employees and dependents] isn't passing along to the FEHBP costs that it's incurring in caring for its other customers," she said. "If you let 47 million more people in, you have a cost-accounting and auditing nightmare."

"I would think that number one, the insurance companies' procedures and frankly costs would have to become much more transparent, that they would be forced to disclose a lot more about their whole operations including their costs if they are allowed to participate in this windfall opportunity to cover people," said Roger Hickey, co-director of the progressive advocacy group Campaign for America's Future.

Hickey said he thought expanding FEHBP would affect the prescription drug market.

"To be telling the drug industry that they'd be selling to a much larger universe of buyers a much larger quantity of drugs, that would give the government more leverage to get lower prices the way [Veterans Affairs] does it now," he said.

Clinton is not the only candidate to turn to FEHBP as a model. Sen. Barack Obama, D-Ill., proposed creating a new national health plan with a benefits package "similar to that offered through the Federal Employees Health Benefits Program."

In contrast, former Sen. John Edwards, D-N.C., has proposed setting up a network of regional health care markets. The markets would offer a range of plan choices that would be portable when enrollees leave or change jobs.

Sen. John McCain, R-Ariz., said in his proposal this week that "families should be able to purchase health insurance nationwide, across state lines, to maximize their choices, and heighten competition for their business," but did not indicate whether FEHBP would be one of the plans he would let Americans purchase.

In 2000, McCain introduced legislation that would have allowed Medicare-eligible military retirees to enroll in FEHBP, but the bill was never debated. It also would have created a separate risk pool for military retirees.

Both of McCain's main Republican rivals, former Massachusetts Gov. Mitt Romney and former New York City mayor Rudy Giuliani, said they will focus on improving health care market competition as a way to eliminate cost-creating inefficiencies.

All of these reform proposals are in their earliest stages, and economists and advocates alike said they were looking to the campaigns to flesh out their ideas.

"All we really can say is that this is simply one proposal among many," said OPM spokesman Michael Orenstein, of Clinton's plan. "Should any proposal become law, then OPM would of course make changes and adjustments to the program to come into compliance."

What's your opinion on expanding FEHBP to the general public? Vote in our online poll below:

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.