In one sense, the annual federal benefits open season is the time federal employees focus the most on health insurance, comparing plans in terms of coverage, premiums, out of pocket costs, quality ratings and more.
But it’s always open season for comparing the Federal Employees Health Benefits program to insurance offerings by private sector companies. Employees do it, congressional and administration officials do it, advocacy groups do it.
Mostly they end up seeing what they went in wanting to see: that the other side’s benefits are better than ours. Which allows them to make the argument they went in wanting to make: that ours should be improved—and if they can’t, bring theirs down to our level.
That doesn’t mean such looks aren’t important. For federal employees, the stakes are substantial because health insurance, along with the defined benefit FERS or CSRS benefit and the TSP, always show up at the top of employee surveys about benefits—in terms of their value, their role in a decision to join the government and their role in a decision to stay with the government.
Recent years have seen a parade of proposals from Republicans inside and outside Congress to denigrate the value of each of those programs, all based on the notion that they are superior to comparable private sector benefits.
For the FEHB in particular, attention has focused on the premium sharing formula, in which the government pays about 70 percent as the employer, including for retirees. Most commonly these have taken the form of a “voucher” idea in which the government share would be set at a dollar rate and then increased annually by the general inflation rate.
The long-term impact, in effect and by design, would be to shift more of the cost onto enrollees over time. That’s because inflation in the health-care sector almost always is higher than the general inflation rate, sometimes substantially so.
Most recently, the Trump administration proposed a variation on that theme by proposing the government pay three separate premium rates depending on a plan’s quality rating. Like the voucher idea, that did not gain enactment but such ideas never are far below the surface.
Meanwhile, federal employee organizations annually complain that the premium increases in the FEHB are higher than they should be. They blame the Office of Personnel Management for not being tough enough during the annual negotiations with carriers, a process that occurs each summer resulting in the premium announcement ahead of the open season for the next year.
That’s happened no matter which party controls the White House, and OPM always responds that the premium increases are about in line with what’s happening in private sector health plans.
So what is happening with them? A recent report by a neutral body, the Employee Benefit Research Institute, paints a picture but the impression is mostly one of the difficulties of directly comparing coverage of private sector employees with federal employees.
One basic issue is eligibility for coverage in the first place. While virtually all federal employees are eligible for the FEHB, only72 percent of private sector employees have access to employer-sponsored health care, it said.
A further complication is that eligibility for coverage in the private sector varies by the size of the employer. Nearly all companies with at least 1,000 employees offer it, while more than 96 percent of those with at least 100 employees also do. However, only 23 percent of companies with fewer than 10 employees offer it, just 52 percent of those with 10-24, and 76 percent of those with 25-99.
Should the federal government be compared with all employers taken together? Or just with large employers? If the latter, as employee organizations would argue, eligibility is nearly identical. If the former, the federal program comes off as looking superior.
Premiums similarly are hard to compare directly because of the variation in private sector plans.
That 30 percent enrollee share in FEHB applies to all of the options—self-only, self plus on and family coverage. But among private sector plans, the study said, the average employee share of the premiums is 28 percent for family coverage and the employee share of self-only coverage averages 21 percent.
A further complication: within those averages there were substantial variations, including the 14 percent of private sector workers who do not have to pay anything for self-only coverage and 8 percent who do not have to pay anything toward family coverage.
As complex as that becomes, remember that doesn’t even take into account the wide variety of coverage terms in private sector programs in comparison with the FEHB—which itself has variation among plans within a general set of coverage mandates. Nor the range of choice within the FEHB in comparison with a private sector employer that might offer enrollees only a few plans, or even just one.
Apples are good for your health, so are oranges. They differ in some ways. Maybe the energy being spent on arguing that one is better than the other could be better devoted somewhere else?