Retirement & Financial Planning Report

Newly offered legislation in the House has again stirred consideration of allowing persons other than federal employees and retirees and eligible family members into the FEHB program.

That idea has been raised for more than a decade by members of both political parties seeking to expand coverage options for private sector people who currently lack employer sponsored health insurance. Even implementation of the Affordable Care Act will not provide complete coverage for that population.


The most recent proposal, which was introduced on a bipartisan basis, tracks many similar prior plans in asserting that the FEHB is a model program with a structure already in place that could be easily adapted to a broader enrollment pool. However, employee organizations always have been opposed, arguing that the federal population would become second-class citizens in their own program, if overwhelmed by the number of outside enrollees.

That would especially be the case if the new population would be allowed to mix in with the existing FEHB enrollee pool, whose demographics and claims rates are well established. Adding others would have an unknown impact, but the organizations fear the effect would be a negative one.

The idea most recently was raised in 2009 when the ACA was under consideration but was not studied thoroughly at the time. The most recent look into the issue apparently came in a 2006 Congressional Research Service report noted that most proposals offered over time would “separate the risk pools for the newly qualifying eligibles from the currently existing pool of eligibles. In this case, premiums for the new group could potentially be higher than premiums for the existing federal pool, because the new pool wouldn’t have the advantage of spreading the risk across 8.2 million people. As a result, premiums for the expanded FEHB might not be significantly less expensive than other individual or small group options available in the market today.”

In other words, to make such an expansion attractive to the currently uninsured population, there would be pressure to combine the risk pools, with the current FEHB population subsidizing the newcomers.