As Open Season ends, feds’ full attention turns to health care reform

Congress wrangles over provisions related to federal workers. Congress wrangles over provisions related to federal workers. Photos.com

As the 2009 Open Season for the Federal Employees Health Benefits Program comes to an end, federal employees and their advocates are keeping close watch on the health care reform legislation being hashed out in Congress.

The House passed its health care bill on Nov. 7, which included a cap on flexible spending accounts, a popular benefit with federal employees. The Senate plan includes an excise tax on some health care plans. While lawmakers have debated giving the Office of Personnel Management, which manages FEHBP, a central role in administering a national health insurance program, that idea is not currently part of either bill. As senators debate their version -- and its 376 amendments -- here are some areas of interest to federal employees.

Excise tax An excise tax on health care plans with premiums over a certain threshold -- $8,500 for a single plan, and $23,000 for a family plan -- is included in the Senate health care plan, but not in the House version. Supporters of this levy say it will help pay for health care reform by taxing expensive Cadillac plans, while simultaneously providing insurers with incentives to cut waste and unnecessary spending to keep the cost of their plans below the premium threshold levels.

But critics, including several federal workforce unions as well as the National Active and Retired Federal Employee Association, claim the excise tax is actually a tax on the middle class that will affect many FEHBP enrollees. Although the tax is technically on the insurance company, they say ultimately FEHBP enrollees will bear the brunt of the cost through increased premiums, out-of-pocket costs or fewer benefits. The premium threshold will increase as a result of a formula tied into the Consumer Price Index, but since health care costs normally rise faster than the CPI, the number of health care plans affected by the excise tax could increase over time.

One amendment, offered by Sen. Kirsten Gillibrand, D-N.Y., would raise the premium thresholds to $9,500 for a single plan and $25,000 for a family plan. Sen. Bernie Sanders, I-Vt., has gone a step further and introduced an amendment that would remove the excise tax entirely and replace it with a surtax on high income individuals.

Flexible spending accounts Both the House and Senate bills include a $2,500 cap on the amount of pre-tax money an employee can put into a flexible spending account, which can be used to pay for out-of-pocket medical expenses. FSAs are one of the options available for federal employees; the current cap on tax-exempt contributions now is $5,000. Reducing that limit to $2,500 could have some adverse affects on payments for medical care, although some observers have said it would affect only a small percentage of federal workers with chronic health care problems.

An amendment offered by Sen. Charles Schumer, D-N.Y., would ensure the limit is adjusted for inflation. Sen. Richard Burr, R-N.C., has introduced an amendment that calls for a $5,000 cap for federal employees and private sector workers. The current cap on FSAs for private sector employees varies.

Possible changes to FEHBP Behind the scenes, senators quietly have been crafting a compromise in the hope of finding a deal with support from at least 60 senators, the number needed to break a filibuster and vote on the bill. They appear to be moving toward a proposal to have the Office of Personnel Management administer a national health insurance plan for uninsured Americans, based on FEHBP. No specifics have been released yet, as lawmakers are still hammering out the details.

The prospect of OPM involvement in a national health care plan raises several questions. Can FEHBP and a to-be-determined national health insurance plan be managed separately in an effective way? Would this proposal eventually lead to opening up enrollment in FEHBP to the general population -- a move that critics have argued would increase premiums for those already enrolled?

"It's unclear whether there would be sufficient safeguards," said Daniel Adcock, legislative director for NARFE. "That still has to be nailed down, so that's what should be a concern to federal employees and retirees."

As it stands now, the Senate bills strips members of Congress of their FEHBP coverage, requiring them to participate in state-based health care exchanges. One amendment, offered by several Republican senators, would expand that exclusion to include other officials, as well as political appointees.

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

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

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

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