A proposal that would have required federal employees and retirees to enroll in health insurance “exchange systems” instead of the Federal Employees Health Benefits Program (FEHBP) was changed to make such enrollment optional after NARFE opposed the amendment.

If the proposal were to become law, NARFE believes most federal workers and annuitants would be unlikely to join the exchanges because the government/employer premium share and comprehensive coverage in the FEHBP would be more generous than the exchanges.

The amendment that threatened the existence of the FEHBP was offered by Sen. Charles Grassley, R-IA, as the Senate Finance Committee considered the health insurance overhaul bill introduced by Committee Chairman Max Baucus, D-MT. At press time, the committee was still working on the bill.

In September, NARFE President Margaret L. Baptiste had asked NARFE members to tell their lawmakers to oppose any proposals that would require them to leave the FEHBP and enroll in an exchange plan, or plans that would open the FEHBP to nonfederal civilians without calculating their premiums in a separate risk pool.

FEHBP vs. Exchange System

The FEHBP is an employer-provided health care program administered by the Office of Personnel Management (OPM).  Premiums for most FEHBP plans are “experience rated,” which means that premiums are based on the most recent experience with the cost of providing coverage to plan enrollees. OPM negotiates premiums and benefit design with each FEHBP carrier, and premiums are usually competitive with the rates set in other large employer-sponsored health plans.  

The health insurance exchange systems established in the various reform bills are modeled on the FEHBP system. When members of Congress and President Obama say that reform will get people closer to what Congress and federal employees have, they are referring to the number of choices available through the FEHBP. By participating in a health insurance exchange, individuals and small businesses will be able to have more choice because there will be a variety of plans offered in the exchange.  

Large employers would be penalized for canceling their insurance programs in an effort to place more people into the health insurance exchange.

Broadening Participation in FEHBP?

Under the leading health care reform bills under consideration, the exchanges would be separate from the FEHBP, and the federal employee program would not be opened to nonfederal civilian enrollees.  However, at press time, Sen. Ron Wyden, D-OR, was considering offering an amendment to the bill before the Senate Finance Committee that would allow certain low-income nonfederal civilians to enroll in the FEHBP.  

While NARFE supports access to comprehensive health care for all Americans, the Association insists that any proposal to open the FEHBP to the public must include separate risk pools, which the Wyden amendment does not contain.  For that reason, NARFE opposes the amendment.  

Risk pools are used to calculate health plan premiums based on the cost of providing coverage to enrollees. Without the opportunity to study nonfederal enrollees in a separate FEHBP risk pool, the introduction of any new community into the FEHBP could result in unanticipated premium increases.

In a letter sent to all Senate Finance Committee members on September 24, NARFE President Baptiste wrote: “As an employer-provided program, the FEHBP has been a highly successful recruitment and retention tool to attract the best and brightest to federal service. The Wyden amendment blurs the line between the FEHBP as an employer-provided health insurance benefit and other federal health safety-net programs.”
 

Public Plan

If Congress creates a “public plan” in some form, it would be an option as part of the exchange. The public option would not be available to most Americans who are covered by employer-sponsored health insurance, including members of Congress, their staffs or the FEHBP community.  

In July, opponents of the public option offered several amendments to reform bills that would require members of Congress and their staffs to participate in the public option if one is created. None of the attempts succeeded in the House of Representatives, but an amendment offered by Sen. Tom Coburn, R-OK, to force legislators into the public plan was adopted by the Senate Committee on Health, Employment, Labor and Pensions.  
In a recent interview with The Hill, a Washington, DC, newspaper, Rep. Henry Waxman, D-CA, chairman of the House Energy and Commerce Committee, said that he would consider an amendment that would allow lawmakers the choice to participate in the public option and opt out of the FEHBP.

It is not clear how many amendments might move forward and, if there are changes, what language will be agreed to by both Houses. All of these efforts may be moot if a public option is not included in the final language.

At press time, the Senate Finance Committee bill, which appeared to be the leading vehicle for health care reform, did not include a public option.