A growing number of Senators of both parties, and the President himself, keep suggesting that the American people should get the same kinds of insurance choices federal employees get. Sometimes they may even say we should get the "same deal" as they do.
It’s appealing rhetoric, but almost none of them means it, because as Ron Wyden likes to remind people, most Americans would not get the same choices under these bills that Congress gives itself.
That’s because the bills (including the Baucus and Obama plans) deliberately maintain two mostly separate markets — one for employer-based plans and another for exchange-based plans — and then erect a firewall between them.
The firewall limits (at least in the initial year or so) the ability of employees in the first market to reject their employer-based plans and choose something in the exchange market. Some Senators (e.g., Snowe) would let a few more employees into the exchange the first year. The restrictions could ease by the third year, depending on the bill. But initially, the freedom to choose between alternative plans will occur, if at all, in the exchange, which may or may not include a public option.
Ron Wyden would break down the firewall and allow many more access to the exchange. That could undermine the employer-based market. Lots of parties, including private insurers (if there’s a public option) and unions wanting to protect hard-won employer-based arrangements, are frightened by that prospect.
Equally important, most politicians who tout the federal system model certainly don’t mean the government would provide the same financial support to people buying in the exchange that federal employees get in paying their premiums. Not even close.
The New York Times examines what this equivalence would actually mean, and it turns out that the deal Senator Baucus and friends are offering to the American people would offer far less assistance than Congress gives itself for equivalent coverage.
But here’s a quick snapshot of federal employee health benefits:
Two of the most popular options are national, fee-for-service Blue Cross plans. There is a “basic” option that requires the use of in-network doctors, hospitals and other providers, and a more expensive “standard” option that covers some out-of-network charges.
The basic plan costs employees $92.44,per month or $1,109.28 per year for individuals, and $216.48 per month or $2,597.76 per year for families. The government pays $277.32 per month or $3,327.84 per year for individuals, for total annual individual premiums of $4,437.12, and $649.45 per month or $7,793.40 per year for families, for total annual family premiums of $10,391.16. The out-of-pocket maximum is $5,000.
The standard plan costs employees $152.06 per month, or $1,824.72 per year for individuals, and $356.59 per month or $4,279.08 per year for families. The government pays $337.26 per month or $4,047.12 for individuals, and $763.08 per month or $9,156.96 for families, for total annual individual premiums of $5,871.84 and total annual family premiums of $13,436.04. The out-of-pocket maximum is $5,000 for in-network services and $7,000 for out-of-network costs.
The Times then compares these numbers for the federal government’s contributions to what the Baucus plan is offering:
But now math under the Baucus proposal seems to be this: for the basic plan, a family of four earning just over $66,150 in 2009 would theoretically pay $7,938, and government subsidies would cover the balance of $2,453.16. Federal employees today get a much better deal. They now pay about 25 percent of the insurance cost and the government pays 75 percent, while under the Baucus proposal, a similar family would pay $7,398, or roughly 76 percent of the insurance cost, and the government would pay 24 percent.
Federal employees currently pay about 38 percent of the cost of the standard plan for family coverage; while the Senate Finance bill would have our theoretical family earning just over $66,150 pay about 59 percent of the cost of the standard plan.
In other words, the federal government subsidizes the premiums for federal employees, including members of Congress, from 20 percent more to up to three times more generously than the Baucus plan would do for ordinary Americans required to purchase insurance in the new exchange(s). But at least the Baucus plan is deficit neutral.
By the way, notice that monthly premium of $92.44 that a fed employee pays for the basic individual plan? That’s almost exactly what Medicare charges me. In short, Senators pay something equivalent to Medicare rates for full coverage. So can we see a show of Senators’ hands from those who think Americans should get the same deal?
Politico (h/t wigwam) — AFL-CIO trashes Wyden proposal