Insurance providers will debate who should provide health benefits to federal employees

Health-insurance providers will debate the merits of allowing more types of plans to participate in the federal-employee health-benefit program during a House subcommittee hearing on Thursday.

A representative from UnitedHealth Group will urge lawmakers to draft legislation that allows regional and state preferred provider organizations, or PPOs, to join the benefit program, according to an advanced copy of testimony the company plans to deliver before the House panel that oversees federal-workforce programs.

The group argues that such a move would increase competition within the benefit program and help keep costs in check.

Blue Cross Blue Shield, which covers more than 60 percent of the federal workforce as the sole provider of the program’s government-wide “service benefit plan,” will argue for blocking participation by carriers not willing to offer uniform premiums nationwide, according to advanced testimony from the organization.

The insurance-industry giant is concerned that smaller providers will cherry pick low-cost regions, ultimately driving up premiums for nationwide plans. The group estimates that 54 percent of federal employees would see their premiums increase if regional PPOs are allowed into the mix.

A representative from the nation’s largest federal-employee union is also scheduled to testify Thursday. The American Federation of Government Employees will raise concerns about a 40 percent excise tax on high-cost “Cadillac” health plans starting in 2018, according to the group’s prepared remarks.

AFGE contends that the tax, which comes as a provision of the Affordable Care Act, will make health benefits less affordable for federal employees whose plans meet the threshold. The union argues that some workers pay high premiums that would meet the bar because of greed on the part of insurance providers, as well as a lack of push back from the Office of Personnel Management, which negotiates the rates.

AFGE also plans to speak out against potential efforts to convert the federal-employee health-benefit program into a premium-support plan — known among critics as a voucher system — or to change formularies in a way that raises costs for workers, according to the group’s prepared remarks.

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Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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Josh Hicks · April 10, 2013