Many federal workers -- scientists, secretaries and senators -- could find their health insurance premiums doubling in the near future and/or be left holding the bag for gigantic medical bills if Congress goes ahead with plans to force the U.S. in-house insurance program to pay primary medical costs of retirees that are now picked up by Medicare.
That is the assessment of top federal insurance experts and some members of Congress who are trying to head off changes already cleared by the Senate Finance Committee and the House Ways and Means Committee.
Medicare is now the primary payer of medical costs (Part B of Medicare) for retired government workers who are covered by both the Federal Employees Health Benefits (FEHB) program and Medicare. The Senate Finance Committee has proposed making the FEHB the primary payer of Medicare-eligible retiree costs. That would save Medicare about $960 million a year, adding nearly a billion dollars to the annual cost of FEHB. The House Ways and Means Committee has okayed a similar plan, though it is considered less drastic than the Senate's.
Government insurance experts say some plans in the FEHB program (there are 119, ranging from nation-wide programs to community and union-run insurance programs) with larege numbers of retirees could be forced to double their premiums next year, if the change is made. Office of Personnel Management, which runs the FEHB, estimates premiums for self-only coverage under Aetna, the second largest carrier in the program, might rise more than 400 percent because it has many federal retiree subscribers. Some union plan premiums would make big jumps as well. Overall, it is estimated that the Senate Finance Committee changes would increase the preimiums for the typical fed -- there are 9 million employes and family members covered -- a minimum of 20 percent next year.
OPM Director Donald Devine told a Senate Government Affairs subcommittee yesterday that his agency cannot support the proposed changes at this time. Chairman Ted Stevens (R-Alaska) and ranking minority member David Pryor (D-Ark.) are concerned that any sudden change in payment priorities -- from Medicare to the FEHB -- could cause serious imbalances in the government health insurance program.In response to a question, Devine said it is possible that one or more of the insurance carriers in the program could be driven into bankruptcy. Should that happen, workers moving into a new insurance plan could not count on it paying bills they had already incurred.
One of the problems in making such a drastic change -- which would make big premium differences -- is that rates (and benefits) of health insurance plans are negotiated in July and August of each year. Workers and retirees then have an open season period in the fall to switch to another plan for the upcoming year. Insurance experts figure that large numbers of retirees shifting to a less expensive plan could drive its costs up dramatically, forcing it to raise rates the following year. Those rate changes could then force a big switchover of retirees in the next open season, making it impossible for plans to estimate costs.
OPM officials say they might be forced to cancel open seasons in future to stop imbalances, and this action could freeze workers into a plan with very high rates for years.
Federal and postal union leaders who would like the changes killed, or at least delayed, hope that members of Congress -- who are mostly covered by the FEHB and would face the same big premium increases -- will take another look at the proposals and water them down in the Senate Government Affairs Committee and the House Post Office-Civil Service Committee, or kill them when they come up for a floor vote.