Senate language eases employee fears about OPM and health reform

Many federal employee groups appear satisfied that Senate legislation expanding the Office of Personnel Management's role in national health care also will protect its ability to administer the Federal Employees Health Benefits Program.

Daniel Adcock, legislative director for the National Active and Retired Federal Employees Association, said his organization, along with the National Treasury Employees Union and other federal employee groups, pushed language ensuring that FEHBP be kept separate from any new health care plan, and that the agency's funding to run the federal employee plan remain intact. The action came after word of the proposal to boost OPM's role first surfaced about two weeks ago.

"They were very responsive to our practical concerns," said Adcock, who opposed the idea of giving OPM a broader role in health care when it was first reported. "We're supportive of the changes that were made in the bill."

The final details in the plan were revealed on Saturday, when Senate Majority Leader Harry Reid, D-Nev., unveiled his manager's amendment to the health bill under debate. The plan would require OPM to negotiate with health care insurers to provide national plans that could be purchased by individuals on state-based exchanges. The plans would compete with state-based plans offered directly by insurers to individuals. The idea was to provide an alternative to a government-run health care program -- the so-called "public option" many Democrats have advocated throughout the health care debate.

Under Reid's amendment, OPM is required negotiate with insurers "in a matter similar" to the way it does under FEHBP in terms of premiums, profit margins and other cost and benefit issues. But while OPM would conduct the negotiations, the state-based exchanges would administer the system. OPM would be required to negotiate with at least two national health care plans, one of which must be a nonprofit insurer.

The amendment includes a section forbidding OPM from drawing resources or personnel away from FEHBP, ensuring that enrollees in the new plans be put in a separate risk pool, and prohibiting any requirement that current FEHBP insurers join the exchanges.

"Nothing in this section shall be construed to permit the [OPM] director to allocate fewer financial or personnel resources to the functions of the Office of Personnel Management related to the administration of the Federal Employees Health Benefits Program," the amendment states.

NTEU issued a statement praising the protections.

"I am pleased to see the current Senate health care bill reflects the position advanced by NTEU that maintaining the integrity of the Federal Employees Health Benefits Program as an independent employer-sponsored health plan is essential," union president Colleen Kelley said in the statement.

But while federal labor groups are breathing easier, others are raising questions about the Senate's plan.

The Congressional Budget Office, in its analysis of the amendment, questioned whether any insurers would want to sign up for the plan, and estimated it would have little impact on national health care premiums or federal spending.

"This certainly isn't going to revolutionize health care options in the United States, but it satisfies a certain political objective of having national plans that are there to compete with private insurers," said Frank McArdle, a former Social Security Administration official who now works in the Washington office of human resources consulting firm Hewitt Associates LLC. Randall R. Bovbjerg, a health care scholar at the Urban Institute, said FEHBP's system of competition and negotiation of benefits through OPM was a good example for state-based exchanges to follow. But without an employer, such as the federal government, assuming a large percentage of the costs and spreading health care risks and keeping premiums reasonable, he said, there's the possibility that some plans could become unaffordable.

"It does offer choice, and complete freedom to tailor next year's plan to what you want," Bovbjerg said. "People really value that. But where you don't have that employer-based stability and contribution, that can be disruptive."

Walton Francis, author of the Consumers' CHECKBOOK 2010 Guide to Health Plans for Federal Employees, said the proposal could give some insurers flexibility to offer new options to consumers.

"Having lots of available plans to choose from is a plus, not a minus," Francis said. "I don't see any negatives to it."