Democrats: Leave federal employee health plan out of deficit deal

Several Democratic lawmakers plan to reject any deficit reduction proposal that targets federal employees’ benefits, Government Executive has learned.

While some plans have called for cuts in civil servants’ compensation, including changes to the Federal Employees Health Benefits Program, Democrats in Congress said federal workers should not be targeted to reduce the nation’s debt.

“Sen. [Daniel] Akaka opposes using any employee benefit as a pay-for because federal workers are already sacrificing with the pay freeze and changes to annuity contributions for new employees,” Jesse Broder Van Dyke, a spokesman for the Hawaii Democratic senator, told Government Executive.

Akaka, chairman of the Senate Homeland Security and Governmental Affairs Subcommittee on Oversight of Government Management, is retiring at the end of the year but will have an opportunity to oppose benefits reductions if they come up during the lame-duck session, as lawmakers seek to find savings to avoid the across-the-board cuts set to kick in on Jan. 2, 2013.

The much-discussed Simpson-Bowles budget plan, commissioned by President Obama and released in December 2010, recommended turning FEHBP into a “defined contribution premium support plan that offers federal employees a fixed subsidy that grows by no more than [gross domestic product] plus 1 percent each year.”

The commission estimated that plan would save the government $18 billion during a 10-year period.

A Congressional Budget Office report released earlier in November estimated that “adopt[ing] a voucher plan and slow[ing] the growth of federal contributions for the Federal Employees Health Benefits program” would save $5 billion in the year 2020.

In his budget, Rep. Paul Ryan, R-Wis., called for a pay freeze and unspecific changes to reduce the costs of federal benefits. “Federal workers deserve to be compensated equitably for their important work, but their pay levels, pay increases and fringe benefits should be reformed to better align with those of their private sector counterparts,” it stated.

Rep. Elijah Cummings, D-Md., ranking member of the House Oversight and Government Reform Committee, told Government Executive he thinks federal employees have paid their fair share.

“Federal workers have already sacrificed tens of billions of dollars over the past several years toward reducing the deficit,” Cummings said. “House Republicans should stop treating middle-class federal employees like a piggy bank they can raid without asking the wealthiest Americans to contribute their fair share. If we’re serious about resolving the fiscal cliff, we must take a balanced approach that includes both increased revenue and targeted spending cuts while protecting middle-class American workers.”

Ryan’s office did not respond to a request for comment.

Cummings’ counterpart, Rep. Darrell Issa, R-Calif., the committee’s chairman, declined to speculate on what may or may not be a part of a deficit reduction deal.

Walton Francis, an independent consultant and author of Consumer's Checkbook  Guide to Health Plans for Federal Employees, said the federal government currently pays 70 percent of its employees’ health care premiums, which is “right square in the middle” of what large, private sector employers pay their for their employees’ care.

“It would be an arbitrary cut,” Francis said. “There’s no reason per se to make that reduction.”

Francis added that while some may favor such a cut, it could have the unintended consequence of motivating lower income federal workers to opt out of FEHBP in favor of the open-market exchange, which could in turn increase costs to the government.