CBO Lists Potential Cuts to FEHB Premium Sharing, COLAs, Other Ideas

In its latest budget options report, the CBO once again mentions the concept of changing the formula for setting the employer and enrollee shares of FEHB premiums. Currently, that is done through a percentage-based calculation that results in the employer share being about 70 percent. Under a voucher system, the government share would start as a fixed dollar amount—potentially $6,100 for self-only, $13,200 for self plus one and $14,000 for family coverage, CBO said—and increased by general inflation, not by the typically higher rate the FEHB program experiences. That would “increase enrollees’ incentive to choose lower-premium plans” CBO said, and for the lowest-cost, the voucher could cover the entire premium. However, overall, “participants would eventually pay more for their health coverage” and some might give it up altogether. Other options mentioned in the report include basing COLAs in federal retirement, Social Security and several other programs that are inflation-adjusted annually on the “chained” consumer price index, which adjusts for changes in spending patterns as prices vary; that would shave about a quarter of a percentage point off the COLA each year on average, it said. It also named as an option reducing the federal employee pay raise each year by a half-percentage point below what otherwise would be paid, which would yield a projected savings of $55 billion over 10 years.