The White House’s upcoming budget plan provide the first look at the administration’s intent regarding health insurance and retirement, reflecting a statement issued in the early days of the administration that “federal employee health and retirement benefits continue to be based on antiquated assumptions and require a level of generosity long since abandoned by most of the private sector. Those costs are unsustainable for the federal government.” Past budget plans by House Republicans have for example switching to a voucher system in which the government contribution toward FEHB premiums would be set at a flat dollar rate rather than as a percentage of the total cost. CBO has said that while such a change would encourage some enrollees to switch to lower-cost plans–and in some cases the dollar amount could cover the entire premium, leaving the employee paying no premiums–overall it would result in a shift of costs from the government to enrollees over time. Regarding retirement, some Republicans have suggested eliminating the FERS defined benefit for those hired after some still-unspecified date. However, that would produce little in savings in the immediate years ahead, the period that budgets look to for savings. Savings in that timeframe could be found in familiar proposals such as those to: require all employees to pay more into retirement (with the government then paying in less); lower retiree COLAs; base future annuities on the highest five salary years rather than the highest three; and eliminate the “special retirement supplement” for FERS employees who retire before age 62 and that is paid until they reach that age and can draw Social Security.
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