Expert's View

Last month the Congressional Budget Office issued a 256-page long report entitled "Reducing the Deficit: Spending and Revenue Options, the latest in a series of similar reports over many years. It contains several options on federal employee and retiree benefits that will be sure to raise your blood pressure, and a few others that are guaranteed to give you cardiac arrest—if you believe that those recommendations are going to be enacted.

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Those options touch on issues including how much you would have to pay for certain benefits, what those benefits would be, and the age at which you could get them.

The CBO report recommendations are in two major parts: mandatory spending and discretionary spending. Most of the recommendations that would directly affect you fall into the mandatory category but there are a few that are discretionary. In this first article on the report, I’ll take them in the order they appear in the report.

Minimum Out-of-Pocket Requirements Under TRICARE For Life

Yes, I know that this is a topic that doesn’t apply to all federal employees and retirees; however, there are a substantial number of feds who served in the military and are eligible to enroll in it. And those who do are permitted to suspend their FEHB coverage while covered by it. Tricare supplements Medicare. As such, it pays nearly all medical costs for acute care not covered by Medicare and requires few out-of-pocket costs. In 2010, DoD spent over $8 billion to cover its Medicare eligible beneficiaries.

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CBO recommends the introduction of minimum out-of-pocket requirements. "For calendar year 2013, TFL would not cover any of the first $550 of an enrollee’s cost-sharing payments under Medicare and would cover only 50 percent of the next $4,950 in such payments. (Because all further cost sharing would be covered by TFL, enrollees would not be obliged to pay more than $2,025 in cost sharing in that year."

Because the imposition of out-of-pocket payments and greater cost sharing, CBO believes that savings of $15 billion would be made through 2016 and about $43 billion through 2021. This would occur largely through the more prudent use of medical services by enrollees. In its words, "Research as generally shown that introducing modest cost sharing can reduce medical expenditures without causing measurable increases in adverse health outcomes for most people."

Next time I’ll talk about a proposal to adopt a voucher plan and slow the growth of federal contributions to the FEHB program.