What Does Reform Do to Your Member of Congress’s Plan?

categories: National Health Exchange, Obama and Congress

Published September 22, 2009 @ 05:41PM PT

It’s one of the weirder pieces of snark or vitriol you'll here among those skeptical of the health reform plans moving through Congress. “If this health reform plan is so good,” someone will snarl, “then why do members of Congress make an exception for themselves so they don’t have to participate?” The question is mystifying. For one thing, it’s drop-dead wrong -- the Federal Employee Health Benefits Plan would be affected by health care reform the same way any big employers’ benefits plan would. No exceptions for your Senator. For another, the question misses the larger point -- we’re talking about a reform plan that would actually make your insurance options look more like what your Senator already enjoys.

NPR has a good Q&A on how the FEHBP works, but here are the essentials. Every federal employee, be they a postal worker, a paper-pusher, a Cabinet Secretary, or a Senator, is given a menu of insurance plans based on where they live. Some of the plans are national, some of them are regional, but all of them are transparent -- you can compare like to like on coverage. Every plan meets a minimum level of coverage, including primary care and prevention, and no one can be turned away on the basis of pre-existing conditions. The federal government, as your employer, picks up a big chunk of the premiums -- 72% on average, which is equivalent to the average for all private employers who supply benefits. As an extra bonus, most of the standard plans have a cap on your out-of-pocket spending on medical care in terms of co-pays, deductibles, etc.: $5,000 per family for in-network providers and $7,000 overall. The coverage is pretty great, and the costs are relatively low -- the kind of rates you get when you happen to have 8 million members in your plan.

It’s a pretty good array of options. Uncle Sam turns out to be a generous boss. It’s also pretty egalitarian -- every full-time worker and qualified retiree gets basically the same deal. By the way, this is really going to bake your noodle: unionized employees, like postal workers, have actually used the collective bargaining process to negotiate for the federal government to pick up even more of the share of the premiums. So that means your letter carrier may actually have a better deal than your Senator. Now ain’t that America?

If this plan sounds familiar, it should. It’s the same basic principles as the Health Exchange. Array of private insurance options at affordable rates? Check. Regulations against exclusion on the basis of pre-existing conditions or age? Check. Coverage for primary care and prevention? Check. A cap on out-of-pocket expenses? Check. Putting the choice in your hands to choose what’s best for you and your family? Double check. The idea of giving uninsured Americans the option of enrolling in the FEHBP itself or an FEHBP-like set of options (the Health Exchange) has been at the heart of Democrats’ health care reform proposals since John Kerry ran for president. It’s the controlling idea for the plans offered by Wyden, Edwards, Clinton, Obama and more. Now the Exchange isn’t an identical twin to the FEHBP -- the FEHBP has better cost-sharing, while the Exchange has the public option, which could significantly reduce costs for all the plans in the Echange through competition -- but it’s at least fraternal.

One last bit, now that this idea is taking legislative shape. What about eventually requiring employers outside the Exchange to match the plans in the Exchange in terms of coverage, cost and regulations, as the House bill does? Ah, here’s the crux of the matter. The federal government would eventually have to match those plans in the Exchange, like any big employer would. However, Uncle Sam is going to have a much easier time. Why? The plans in the Exchange are based on the plans in the FEHBP already! If the excise tax on high-cost insurance plans in the Baucus bill goes through, the FEHBP right now would be subject to that. If the FEHBP opts not to cover an eligible full-time employee, Uncle Sam is on the hook for the employer mandate, like any employer would. Same-same. The main difference is you're now talking about a pool of some 30 million people instead of 8 million -- imagine what those rates will look like.

So it’s less that the United States Senate is working on a plan that they won’t be bound by themselves. It’s that they’re working on a plan to give you what they already have.

(Photo credit: http://www.flickr.com/photos/nostri-imago/ / CC BY 2.0)

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Comments (7)

Exactly! Well said! Some folks just can't get it.

Posted by Rachel Russell on 09/22/2009 @ 06:17PM PT
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Some folks are paid not to get it!!!!!

Posted by Cherokee Fred Jesus on 09/22/2009 @ 08:14PM PT
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Tim,

I know you have to click on the state to look at the individual plans; but it looks like only very few of the plans are state-specific plans from the home state of the legislator.

Are the offerings that are not state-specific from other states where the premiums are cheaper? If so, is the "public option" going to likewise not be limited to companies within each state of residence?

Thanks.

Posted by James Dunham on 09/22/2009 @ 08:48PM PT
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The public option is a different kettle of fish entirely -- one that I'm going to put aside a moment because both the SFC mark-up and Pelosi's statement today are in the process of changing what it is and is not.

All of the plans in the FEHBP, be they state-specific or national, are required to comply with the individual state mandates and regulation in the state where they're sold. It's not quite the same idea that you often hear of "selling across state lines," which is a way of bypassing individual state regulations. Instead, it's more like nationalizing the regulations so that the plan has to incorporate all of them where they intend that it be sold. In nearly all cases, the regulations for an insurer to participate in FEHBP is more stringent than the regulations for any one state.

This is the type of deal that you generally only get when you have 8 million potential customers.

Posted by Timothy Foley on 09/22/2009 @ 09:15PM PT
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I consider the first round of plans brainstorming. That said, as things go from macro to micro, will states keep a medicaid system that currently gets most monies from the federal government? This is a bumpy constitutional exit/entrance into state rights and legalities where the vehicle of health care cannot go off the mandatory road.

Posted by M Arnest on 09/23/2009 @ 03:28AM PT
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So the average total monthly cost for the FEHB Blue Cross Blue Shield Standard plan is $543.71 for an individual and $1,273.35 for a family.

And these plans are "affordable" because the taxpayer picks up 72% of the bill..

I'm trying to imagine what rates will look like when the pool is increased 4 fold... I'm trying to imagine who will pick up 72% of the premiums then....

Posted by Martin Bring on 09/23/2009 @ 09:38AM PT
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I just thought I'd sneak in a link which may be related to this post:

http://www.citizen.org/pressroom/release.cfm?ID=865

Posted by Mary Acosta on 09/25/2009 @ 11:28AM PT
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Tim has been an online organizer and blogger on health care policy for the Obama for America campaign (during the primaries) and currently for the Committee of Interns and Residents/SEIU Healthcare, a labor union for intern and resident doctors. Views expressed here are Tim's, and don't represent the positions of CIR or SEIU.