Bill ties Cadillac tax to feds’ health care costs

The health care bill the House likely will pass this weekend will use the cost of federal employees' health benefits to determine which expensive plans should be taxed to pay for reform efforts.

The reconciliation bill pushes back implementation of a tax on so-called Cadillac health care plans from 2013 to 2018, and raises premium thresholds for plans eligible for taxation from $8,500 to $10,200 for individuals and from $23,000 to $27,500 for families. The value of vision and dental benefits would be excluded from those price ceilings, so only the cost of core health insurance will be used to determine which plans are subject to the excise tax.

According to the legislation, those thresholds could adjust upwards if the per-person cost of coverage under the Federal Employees Health Benefits Program's Blue Cross Blue Shield standard option increases by more than expected, according to predictions of inflation between the bill's passage and the tax's effective date in 2018. An earlier version of the language would have indexed the premium threshold for the excise tax to the growth of the consumer price index plus 1 percent.

Federal employee groups strongly opposed the tax's inclusion in health care reform at all, and lawmakers such as Rep. Gerry Connolly, D-Va., fought to exclude federal employees from the excise tax provisions. But a larger effort to exempt union members from the tax permanently was abandoned in favor of the overall delay for all plans and all workers until 2018, a change that diminished by 80 percent the amount of revenue Congress expected to raise from the levy.

Rep. Stephen Lynch, D-Mass., a whip for Speaker Nancy Pelosi, D-Calif., and chairman of the House Oversight and Government Reform federal workforce subcommittee, said on Thursday that he would vote against the legislation because he opposes the excise tax and the methods House leaders are using to move the stripped-down Senate legislation to a vote. Lynch voted for a previous version of health care reform that did not include the excise tax.

The legislation does include a change federal employee unions have pushed for in FEHBP: A provision making it easier for families to purchase health insurance for their adult children. After 2014, families will be able to cover their nondependent children until they turn 26. Before 2014, families only will be able to purchase that coverage if their child does not have a choice of coverage from an employer.

A National Treasury Employees Union spokesman said the union was not prepared to comment on the reconciliation legislation on Thursday.

The reconciliation bill also makes provisions to adjust the excise tax threshold for plans carrying more older workers and women than the national averages in the workforce, because those groups are more expensive to insure. House committee staff did not immediately return requests for comment about which diversions from the average would trigger the adjustment, or which formula would be used to raise the threshold.

Edmund Byrnes, a spokesman for the Office of Personnel Management, said the agency was not sure whether the reconciliation legislation preserved a role for the agency in running health insurance exchanges similar to the Federal Employees Health Benefits Program. The Senate bill included such a provision as an alternative to a government-run health care plan.