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| NEWS FROM NARFE |
| NARFE TROUBLED BY OPM CALL FOR SEPARATE FEHBP RETIREE COVERAGE AND OPPOSES PLANS TO EXPAND CONTROVERSIAL HSAs |
| March 20, 2008 |
| FOR MORE INFORMATION: Dan Adcock, Jill Crissman (703-838-7760) |
National Active and Retired Federal Employees Association (NARFE) President Margaret L. Baptiste said today that her association has concerns about proposals in the Office of Personnel Management’s “2008 Federal Employees Health Benefits Program (FEHBP) Carrier Letter” (also known as the “Call Letter”) which would create separate health plans for Medicare-eligible federal annuitants and expand controversial Health Savings Accounts (HSAs). However, Baptiste applauded OPM’s decision to encourage FEHBP carriers to offer enhanced hearing benefits for adults, including professional services and hearing aids.
“While OPM says that enrollees in the Medicare pilot “sub-option” would pay the same premiums set for their counterpart FEHBP plans, we are troubled that a plan specifically created for Medicare-eligible federal annuitants could open the door for separately rated retiree plans in the future with substantially higher premiums than other FEHBP plans,” the NARFE President said. “In the 48 year history of the program, there has never been a separate FEHBP plan based on retirement status or age.”
Baptiste also said that NARFE is concerned that the cost of the Medicare pilot sub-option’s “pass-through accounts” could result in benefit cuts or higher deductibles, copayments and coinsurance for federal retirees and survivors.
In addition, the Association is disturbed that payments from the pass-through accounts would be used to encourage federal annuitants to join private Medicare options, like “Medicare Advantage” and the Medicare “Part D” prescription drug program.
According to Baptiste, the President’s fiscal year (FY) 2009 budget would weaken traditional Medicare by reducing payments to doctors and hospitals and, as a result, make private Medicare Advantage (MA) plans more attractive to beneficiaries. Most federal annuitants enroll in traditional Medicare because the program’s coverage coordinates better with FEHBP benefits than Medicare Advantage. Recent studies have shown that Medicare Advantage plans are paid more than the average traditional-fee-for-service Medicare plan in their area. NARFE, and its 53 member Leadership Council of Aging Organizations (LCAO) sister organizations, have urged lawmakers to cut overpayments to Medicare Advantage plans ensuring equitable funding and treatment of all beneficiaries by the Medicare program.
The Medicare Part D program was created to offer a prescription drug benefit for the 16 million older Americans who had no such coverage. Federal annuitants do not need to pay the Part D premium because they currently receive drug coverage through their FEHBP plan. NARFE has long been concerned that Medicare Part D would encourage employers, including
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the federal government, to reduce or eliminate prescription drug coverage to Medicare-eligible retirees under FEHBP. Part D drug coverage is substantially inferior to what FEHBP now provides.
To add insult to injury, OPM persistently has refused to apply for a payment -- available to other public and private employers who provide drug coverage as generous as Medicare Part D – which could be used to lower FEHBP premiums.
OPM continues to encourage FEHBP insurance carriers to expand the availability of High Deductible Health Plan/Health Savings Accounts (HDHP/HSA) despite the fact that the controversial option has only attracted a minute fraction of federal workers and retirees. Indeed, a report released March 18 by the nonpartisan Employee Benefit Research Institute (EBRI) and the Commonwealth Fund found “little evidence that the tax benefits of such plans [HDHS/HSAs] have the potential to help change the trajectory of health care cost growth, are leading health plans or providers to provide more information about the quality and price of services to patients…”.
NARFE opposes HSAs because they could increase premiums for comprehensive plans since relatively healthy enrollees with higher incomes could be siphoned off into HSAs. Such concerns were confirmed by a January 2006 report of the nonpartisan Government Accountability Office (GAO), which found that HSAs tended to attract younger and wealthier FEHBP enrollees.
NARFE opposes OPM’s decision in their 2008 call letter to solicit proposals for insurance carriers to offer the long dormant “Indemnity Benefit Plan” as a backdoor attempt to jump start anemic participation in HDHP/HSAs. The President’s FY 2009 budget said that the “Indemnity Benefit Plan” should provide HSAs as a system-wide option. Despite being named in the law which authorizes FEHBP, the Indemnity plan has not been available since the Aetna insurance company stopped offering the coverage in 1990. The entry of a large insurance carrier with an HDHP/HSA option available to most enrollees also could boost participation in HSAs.
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NARFE, one of America’s oldest and largest associations, was founded in 1921 with the mission of protecting the earned rights and benefits of America’s active and retired federal workers. The largest federal employee/ retiree organization, NARFE represents the retirement interests of nearly 5 million current and future federal annuitants, spouses, and survivors.
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