Publisher's Perspective

New rules from OPM will start answer questions about how changes will impact the 8.2 million people covered by the FEHB, the largest employer-sponsored health-care program in the US. Image: Willrow Hood/Shutterstock.com

William Shatner’s voice-over on the opening sequence of the original Star Trek television series described the spaceship Enterprise’s mission as “to boldly go where no man has gone before.”

In addition to stirring grammatical arguments over split infinitives—and ignoring that there were women onboard who were going just as boldly—the phrase has been used to evoke everything from “fortune favors the bold” to “fools rush in where angels fear to tread.”

Keep that in mind as preparations are made to take the FEHB into an uncharted galaxy, by carving out Postal Service employees, retirees and family members into a program to be called the Postal Service Health Benefits program.

The Office of Personnel Management plans to issue rules in April describing that program in more detail, as required by a law enacted last year creating that program, which is to take effect in 2025.

Those rules will start, but only start, to answer questions about how that change will impact the 8.2 million people covered by the FEHB, the largest employer-sponsored health-care program in the country (Medicare is bigger but it’s not an employer-sponsored program).

Just the mechanics “will be challenging,” according to a recent assessment by the USPS inspector general’s office in the typical type of understatement found in such reports.

“For example, the Postal Service will need to develop, implement, and roll out education and training for the participating population. These efforts will likely require additional personnel, funding, and information technology resources,” says a report on that law, which also paves the way for numerous changes in USPS operating and business practices.

The PSHB will mirror the FEHB in many ways, including that it will be run by OPM, the report notes, including contracting with insurance providers to offer postal plans, determining premiums, and calculating USPS contributions to those premiums.

However, a key difference with the PSHB will be a general requirement that newly retiring postal employees enroll in Medicare Part B coverage, which covers physician and outpatient hospital services. Also, PSHB plans will provide their drug benefits through Medicare Part D for eligible retirees.

The report added that the law also requires the USPS to establish by October of this year a program educate employees and annuitants about the program and the options available to them. Postal Service management told us that the specifics of the education program will be determined by forthcoming key OPM decisions about the PSHB program regulations.”

Also, it said, the USPS will need to coordinate with the SSA and Centers for Medicare in setting up the educational program—which likely will include “navigators” to help employees and retirees—as well as for “the funding mechanisms and administrative tasks necessary for enrolling employees in Medicare” and for paying applicable Medicare late enrollment penalties.

That’s just the mechanics. The bigger issue, of course, is what will it mean to the premiums paid by enrollees.

The hope is that the postal enrollees will pay less than they would have by remaining in the FEHB, since mandatory enrollment of postal retirees in Medicare will shift some of their costs onto that program. For those who have both Medicare and FEHB, Medicare becomes the first payer for costs that both programs cover—which is most, although each covers some things the other doesn’t—while FEHB then acts only as a secondary payer. Currently, a quarter of postal retirees aren’t enrolled in Part B and an even smaller percentage elect Part D.

Notably missing from the report, and from the debate in Congress last year over creating the program, is the impact of pulling postal enrollees out of the FEHB. Currently, premiums reflect the historic and projected cost of claims of the entire population. Take out the postal contingent and what happens?

Do postal employees, retirees and family members file claims at higher or lower rates than the non-postal population? That is, does one category subsidize the other? If the postal population is disproportionately costly to the program, taking them out would benefit the non-postal population, easing the upward pressure on premiums. But it also could be the other way around.

No one knows. The postal reform bill was enacted last year, with bipartisan support, by members of Congress who had been debating similar bills for more than a decade. In finally approving what is arguably the most significant change in the program’s six-decade history, they seemed to be substantially motivated by a simple desire to get it over with.

Tune in to upcoming episodes to see whether that was bold or foolish, or maybe both.

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