One of the best things about the Federal Employee Health Benefits Program (FEHBP) is that it is only for members of a special club, and the directors also happen to be both members and the people who make the rules.
As a result, it is a very, very good program.
But the FEHBP, which is limited to active and retired feds, their dependents and members of Congress and their families, could become a campaign issue that — rightly so — would give many feds heartburn.
Some members of Congress, mostly Democrats, who are seeking expanded health care for the uninsured or uninsurable would like to see everybody and anybody eligible for the FEHBP. Presumptive Democratic presidential nominee Sen. John Kerry of Massachusetts has indicated that he would like to see all Americans get the same kind of coverage as members of Congress.
The program now covers 9 million people — including a large chunk of the Washington-area population — with members of Congress, who are also policyholders, dictating policy decisions such as the employer (the government) share of premiums. The government by law pays an average of 72 percent of the total premium for workers and retirees.
That percentage is constant even when premiums go up. They increased roughly 10 percent this year, 11 percent in 2003 and 10.5 percent in 2001. During the same period, workers got pay raises that exceeded the rate of inflation while retirees got cost-of-living adjustments to keep pace with inflation. The increases in the FEHBP were less than the average increases in private-sector health plans.
Opening the FEHBP to anyone in the country was an option considered by the Clinton administration when it was working on health care reform. Groups representing active and retired feds oppose open membership unless separate risk pools, which would mean separate premiums, are established for people outside the federal family. The fear is that FEHBP membership for everyone would have an adverse effect on the risk pool, and that would drive up premiums for all.
The FEHBP is a standout health care program. If you doubt it, look at the deal that area grocery store employees recently signed. The federal program provides benefits for life, not just until retirement, and retirees and young, healthy workers pay the same in the same plans. Congress keeps a close eye on the plan — and the civil service retirement programs — because its members participate.
So if a candidate proposes opening the FEHBP to the general public, cheer for him or her — if you are outside looking in. But if you are a fed or retiree, you had better hope it doesn’t become an issue.
Mr. Kerry’s Web site says his plan would offer “every American access to [the FEHBP] system.”
Pay/pension watch
With six months to go in the cost-of-living adjustment (COLA) countdown, federal/military/Social Security retirees have “banked” 0.9 percent toward their January 2005 COLA. That amount will increase each month based on increases in inflation as measured by the Consumer Price Index. Retirees got a 2 percent COLA earlier this year reflecting the low rate of inflation in 2003.
Meanwhile, the House has taken a giant step forward in the regular, annual battle with the White House over the size of the federal pay raise. Earlier, the Senate went on record as favoring the same 3.5 percent raise for civilian and military personnel. The president has proposed 1.5 percent for the feds.
The House sidestepped the pay issue for a while, but last week voted 299-126 on a “sense of the House” resolution endorsing pay-raise parity. Barring a major economic setback for the nation that sets the stage for a 3.5 percent increase for both federal and military personnel next year.
For some feds — in agencies that are moving toward a performance-based pay system — it could be the last automatic annual adjustment they will get.
• Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or mcauseyfederalnewsradio.com.
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