How health care reform might affect the Federal Employee Health Benefits Program

How will health care reform affect the Federal Employee Health Benefits Program (FEHBP)?

That was the question posed on today's Your Turn.

Senior Correspondent Mike Causey spoke with Margaret Hostetler, Assistant Legislative Director of the National Active and Retired Federal Employees Association (NARFE).

The two discussed a variety of topics relating to your pay & benefits, and we bring you excerpts of their discussion.

Will all Americans become part of FEHBP? Probably not.

Mike Causey: There are various [health care] proposals out there, but one of them from -- I believe it's Rep. Darryl Issa of California, sounds to me like it would either put everybody in [FEHBP] or at least make it a model or have the Office of Personnel Management run it. Is that correct?

Margaret Hostetler: There are some proposals -- this isn't the first time, we've seen them in the past -- where the idea is to put those who have problems getting access to insurance in [FEHBP]. The federal employees' plan, though, when people talk about it, I think, is more of an illustration of what we hope to achieve. That is reasonable costs, access to the kind of insurance protections that they're talking about in these other main plans. So, while it seems like a goal, and it's a very good illustration of what we would hope to have, I don't see that specific proposal being considered. You do see ideas that come from [FEHBP] of access, affordability, the kind of ability to access several plans -- coming out of the various proposals -- the major proposals that they're considering right now in Congress.

MC: We all want the best for everybody, but selfishly, if you're a federal worker or retiree, or you're a member of the FEHBP, you don't want everybody in America in your plan because of the pre-existing conditions and the uninsurability, in many cases.

MH: Yes and even the major plans that they're discussing now [on the Hill] don't even start until 2013 and they have a small group market, an individual market, and that's going to take a long time for that to set up and get straightened out and build a co-op. It's not an easy thing to do, and it would not be easy to do even if you decided to do it through [FEHBP] because it is a much more diverse and different population.

Should FEHBP should be a model for everyone?

MC: President Obama has said that the Mayo Clinic is the best in the country. [President of the Mayo Clinic] Dr. Cortiz has said FEHBP is the best in the country and it should be a model for everybody.

MH: Yeah, I saw that comment. It was nice to get such good press and . . . everybody thinks it is a fine program and it is. It is a wonderful program. It is designed, though, for a specific group of people with a certain risk profile. So, that's where I think it has its limitations as far as being able to serve the rest of the country. The design of it as a way to access health care and have choice is clearly seen in a favorable light by many people.

MC: This week I've talked with three people that are recognized experts in health care and also have some legislative background and they pointed out some interesting things that I think federal workers and retirees should be aware of. They said that the risk pool in FEHBP tends to be older than the national [average] because takes in retirees and the federal workforce, I believe, is slightly older than the average workforce. . . . Also, this person said that feds tend to be a smart group of people -- they nearly all had to take a test [to become employed]. The number of people with higher education is much higher than the national average. . . . They tend to be healthier to begin with.

MH: Yes, I think that's true and I think it's been that way for some time. That is a pretty stable profile of what you've got in the federal government and many of them work in jobs that are not high risk jobs, either, such as you have in farming or mining or in other occupations. So, I think it's true that there is a better risk profile, and, as far as the age of the group goes, that is probably also true, but the federal government is doing some significant hiring. It will be interesting to see what that does to the overall age.

Part of the conversation during the show contained information about what's contained -- for federal employees -- in the Defense Authorization Act. The bill is still in committee, and there are different provisions in the Senate and House versions.

Will there ever be a cure for the FERS flu?

MC: [FERS employees] tend to get sick a lot -- statistics show -- in their last years of service. They take off a Monday or a Friday -- usually not three days in a row, because that would require a doctor's note. The Office of Personnel Management has estimated that this disruption in the work flow, which is difficult to measure, I guess, but they said it costs $68 - 69 million a year. That said, the Obama Administration is apparently opposing this, because it would also have an immediate and forever cost to the retirement system because it would let FERS employees with a lot of sick leave retire on larger lifetime annuities -- indexed annuities. Does NARFE have a position on this?

MH: We have been working very hard to see that that provision is passed. You're absolutely correct. It does create sort of a "new entitlement" of spending that goes on for a long time -- as long as a person is retired -- and therefore it is facing some issues because it does have a price tag and it does create a new entitlement. But we've been working very hard to bring some [equality] between the FERS and the CSRS beneficiaries on that particular issue.

Will retirees get to come back to federal service without penalties?

MC: The Senate version [of the Defense bill] includes language that would permit retired federal workers to come back into government without a salary offset. I guess that's the Dual Compensation Act that they're talking about there?

MH: Right [but] it's restricted under some very restrictive guidelines. Federal employees under the FERS who want to come back and work for a limited period of time would not have to have their FERS pension subtracted, so to speak, from their salary. So, in a lot of cases -- I know this would be useful at where I used to work -- the Social Security Administration. You are hiring a lot of young people, but they need mentors to help them. So this would be very helpful, I think, to the federal workforce managers to have that person be able to come back. Right now that doesn't make sense for most people because they have to have an offset taken through their salary. This would change that and allow them to work under limited conditions. It wouldn't be an open-ended thing, and that's something that I think is very important to our members.

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