CBO pitches voucher plan for FEHBP to Congress

Although the details of the budget agreement still need to be ironed out it appears that federal employees will be specifically identified as casualties in the war against the budget deficit. And why not? They don't have much clout come election time. Congress has not yet identified the specific savings that will come out of the hides of federal employees but it may rely on a Congressional Budget Office document that identifies numerous ways to reduce the federal deficit. Among the CBO suggestions for budget reduction some of which are painful but viable there is one suggestion that belongs in the Hall of Shame. It calls on Congress to "adopt an employee voucher plan for the Federal Employees Health Benefits Program (FEHBP)."

Under this scheme the government would set a dollar cap on expenditures for employee health insurance benefits. Each federal employee would receive a voucher worth a fixed dollar value that could be exchanged for membership in a health insurance plan. If the premium for a particular plan exceeded the voucher's face value federal employees would make up the difference.

The voucher's value in 1997 would be $1 580 for single enrollments and $3 470 for family enrollments. These amounts are based on the government's average contribution in 1997. In subsequent years the voucher's value would be increased only by inflation rather than the rate of increase in health insurance premiums. Over time federal employees would absorb an increasing percentage of health insurance costs.

The CBO says this approach would strengthen competition among health plans in the FEHBP because employees would have to pay the difference between the value of each voucher and the premium for a particular plan. According to the CBO that would make federal workers more "price sensitive " and health plan providers would have an incentive to lower premiums.

If this is the best analysis the CBO can come up with it's no wonder our country's financial position is not what it should be. Why would health benefit plans offer lower premiums to retain enrollees when the Office of Personnel Management guarantees carriers that their plan costs will be reimbursed in full and a profit will be earned? Health benefit providers are not interested in enrolling federal employees at a loss. OPM already forces plan providers to do all they can to reduce their overhead so why should the CBO expect heightened efforts?

As for increasing the price sensitivity of federal employees get real. These people are so grossly underpaid that they don't need a voucher scheme to heighten their price sensitivity.

CBO officials acknowledge that this proposal would result in federal workers paying an ever-increasing share of the overall health insurance premium. They admit it could push employees to choose plans with inferior benefits. The CBO also points out that adoption of the voucher plan would be seen by emp-loyees as a reduction in compensation and that might make it more difficult for Uncle Sam to recruit and retain qualified employees.

The CBO should only present Congress with options that are viable. What is the point of such an exercise if not to waste taxpayer dollars by writing up ridiculous proposals?

Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.

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