What do a brand new 20-year-old government worker and a 99-year- old civil service widow have in common? The answer is that Congress and the White House have many of their key fringe benefits -- such as health insurance and pension payments -- on a potential hit list as they look for a deficit-reduction package that will slow spending and avoid across-the-board cuts in federal programs.
The goal is to raise some taxes while cutting spending for defense and for entitlements and benefits about $11 billion each. The latter category, if you work for or are retired from government, includes you.
Although nothing has been settled, the administration wants to:
Eliminate retiree lump-sum pension payments. The payments, equal to about 7 percent of lifetime salary, now come in two parts: the first shortly after retiring, the second one year from the retirement date. In October that 50-50 split reverts to a single payment unless Congress changes or eliminates it. There is talk of a compromise: staggering the payments equally over three years. Eliminating the payment would save an estimated $6 billion over 5 years.
Delay federal-military retiree cost-of-living adjustments anywhere from three to nine months. The COLA (now estimated at 4.1 percent) is due in January. It would be worth $1 billion to $1.5 billion to retirees.
Apply Medicare's DRG (diagnostic related group) cost-containment feature to the federal employee/retiree health program. DRG pays a fixed fee for specified stays in hospitals. Backers say it has cut Medicare and medical costs billions of dollars and is being adopted by many insurance plans.
Opponents claim applying the DRG to the federal program would lead to greater out-of-pocket costs for individuals.
Retired federal workers whose monthly pension payments don't cover their health insurance premiums may now pay premiums to the Office of Personnel Management.
Before the president signed the legislation sponsored by Rep. Gary L. Ackerman (D-N.Y.), the law required that the entire premium be paid out of the monthly pension check. If the check didn't cover the full premium, the retiree lost coverage. Now a retiree can pay the difference.
The Senate Governmental Affairs Committee is set to complete work today on its own pay bill. Chairman John Glenn (D-Ohio) has offered a modified area-wage system. It would link federal pay to hometown rates paid for similar jobs in private industry.
The House Post Office and Civil Service Committee has approved a $9.5 billion bill that would phase in federal pay raises to close the gap with industry.
Efforts to overhaul the federal pay system this year may depend on the outcome of deficit-reduction talks. Unless the numbers jugglers can prove that pay changes would have little immediate cost, there is a good chance the issue will carry over to 1991, a non-election year.