As “Obamacare” was making its way through Congress in 2009, Sen. Chuck Grassley, R-Iowa, proposed an amendment meant to shame his Democratic colleagues. He suggested that members of Congress and their staff members be required to purchase insurance on the new health exchanges. The idea was to force a tough vote—“You want them to eat their own cooking,” as Avik Roy, a senior fellow at the conservative Manhattan Institute, puts it—but Democrats were happy to pass the amendment, which is now law. The problem was that, thanks to ambiguous language, it may also forbid the federal government from making an employer contribution toward these workers’ insurance premiums, causing a major pay and benefit cut for congressional aides and their bosses—big enough to drive many out of government, several senior staffers warned.
Last week, Politico reported that leaders from both parties were trying to negotiate a behind-the-scenes resolution to the problem. That news finally put Democrats, who supported the health care law, into the bind that Grassley had envisioned. Now, in the language of both the Politico story and the act’s critics, lawmakers were trying to “exempt” themselves from the law. So House Ways and Means Committee Chairman Dave Camp, R-Mich., and several colleagues proposed a bill last week to keep alive the debate over the “exemption.” His measure would move all federal employees into the insurance exchanges—excepting, for technical reasons, members of the military and postal workers. “If the Obamacare exchanges are good enough for the hardworking Americans and small businesses the law claims to help, then they should be good enough for the president, vice president, Congress, and federal employees,” said Camp spokeswoman Sarah Swinehart in a statement. As a piece of messaging, a vote on the bill could be a solid strike at Democratic hypocrisy. The cost? A federal-employee health insurance system that Republicans have long held up as a model for how insurance should be delivered.
The 53-year-old Federal Employee Health Benefit Program works like this: Eligible health plans from around the country can offer coverage for federal workers. Each worker takes a set federal contribution and chooses the plan he or she likes best. People who want more-expensive coverage can buy it, but they have to pay the extra cost. Republicans like the idea because it involves consumer choice and competition to control the price of insurance. And federal employees like it, too—the popular program has run smoothly for decades. According to surveys from the federal Office of Personnel Management, which administers the health insurance program, most plans score satisfaction ratings north of 75 percent.
It’s also been the model for several prominent Republican health policy proposals. Both Medicare Part D (the prescription-drug benefit) and Medicare Advantage (the system of private alternatives to Medicare) were designed to function like the FEHBP. Part D offers seniors a fixed contribution, which they can use to choose from competing private plans. Medicare premium support, which would expand this idea to the federal program’s hospital and doctor benefits, is also a descendant of the FEHBP. Last year, Republicans added premium support to their official party platform. “It’s a consumer-driven system of competing private plans, including plans across state lines, national health plans, all the stuff that conservatives have always argued is a good thing,” says Robert Moffit, a senior fellow of the Center for Policy Innovation at the Heritage Foundation and a longtime champion of the federal benefit system. Now Camp wants to kill it.
Alain Enthoven, the Stanford economist credited with developing and promoting the idea of “managed competition” in health insurance, says the FEHBP, while imperfect, has been enormously helpful in demonstrating the value of competitive insurance markets. “It’s been in place for over 50 years, with remarkably little change from the original design, which I think shows the naysayers that value-conscious competition can work,” he says. Several states, universities, and other large employers now use FEHBP-like exchange models for their employees. (Obama’s health insurance exchanges, too, are built around the basic idea of managed competition, although their critics can point to several differences between their structure and the FEHBP’s.)
That proven history makes some conservative FEHBP fans dubious of Camp’s approach. “What’s striking is that a program that’s so successful and has been viewed by conservatives as so successful, and was, in fact, the model for Medicare Advantage—why would they pick this particular gesture?” says Walton Francis, the principal author of Consumers’ CHECKBOOK’s Guide to Health Plans for Federal Employees and a longtime expert on the FEHBP.
Camp’s proposal would effectively scrap the FEHBP by removing nearly all of its users. Instead of taking a federal contribution to the marketplace that conservatives like, the law would require federal workers to buy insurance from a public marketplace they don’t—with the status of government workers’ employer contribution still unclear. That would mean huge disruptions for federal workers that could accelerate a political backlash against the health care law. But it would also mean the demise of a beloved Republican system for health insurance. Ironically, it could also make the exchanges work better by adding a large population of working adults to the insurance pools to balance out the sicker uninsured people who are expected to sign up.
“The Secret Service agent and the National Park ranger did not bring you Obamacare,” Moffit says. “From the standpoint of intentions, I think Congressman Camp’s proposal is well-intentioned. And getting rid of Obamacare is a just end. But just ends are not a good reason to use unjust means.”