Debate over Subsidy Continues

Another issue GAO examined was the question of whether the program should have taken the subsidy created in order to encourage employers to continue covering their retirees under health insurance after the Medicare prescription drug program was created. OPM did not take the subsidy, arguing that the government has no intention of dropping retiree coverage and that such a payment simply would amount to shifting money from one government pocket to another. However, GAO concluded that the subsidy would have cut about 2.6 percentage points off the FEHB premium increase in 2006, the year the subsidy became available—a one-time reduction. Some with high concentrations of retirees told GAO that their premiums could have been cut by 3.5-4 percent. For a closer look, go to fedweek.com/HotFreeNews in the hot free info section of our website.