A Trump administration proposal for FEHB would result in three percentages of the government’s contributions toward premiums and thus three separate percentages for enrollees, who pay the rest of a plan’s total premium cost, according to OPM.
A budget-related document newly sent to Congress adds that detail to the White House budget plan’s call to vary the government contribution toward total premiums depending on a plan’s quality ratings.
That would add yet another variable to the wide range of premium rates in the FEHB, which differ not only among plans but also according to whether the enrollment is for self-only, self plus one or for family coverage. For each, however, the government contribution formula is the same: 72 percent of a weighted average premium across all plans or 75 percent of an individual plan’s premium, whichever is less.
The OPM document anticipates that instead, there would be a “base” government contribution of the lower of 70 percent of the weighted average or 75 percent of an individual plan’s premium. Then, plans would be divided into three tiers depending on their scores in the FEHB Program Plan Performance Assessment. The base rate would apply to plans in the middle tier; for those in the upper tier the government contribution would be 5 percentage points higher; and for those in the lower tier it would be 5 percentage points lower.
“This proposal would incentivize enrollees to select high performing, high value plans by making them more affordable while simultaneously saving the government approximately 2 percent in premium contributions based on performance scores, enrollment, and rates,” it said.
The proposal is a variant on a long-running idea to set the government contribution at a flat dollar level, rather than by a percentage formula; proponents have argued that such an arrangement would encourage enrollees to shift to lower-cost plans, saving money for both themselves and the government. However, employee organizations have said that would merely shift more of the cost from the government onto enrollees.
OPM also said that the FEHB program would be included in proposed reforms of medical liability law to cap awards for noneconomic damages at $250,000 and to shorten the time in which claims could be filed. “Therefore, this proposal has the potential to lower malpractice insurance premiums, which in turns lowers healthcare costs overall. In addition, these reforms have the potential to reduce unnecessary healthcare utilization, or ‘defensive medicine,’ also reducing healthcare costs,” it said.