1 narfe’s tenth biennial legislative conference march 3-6, 2007 health care issues
TRANSCRIPT
![Page 1: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/1.jpg)
1
NARFE’s Tenth Biennial Legislative Conference March 3-6,
2007
Health Care Issues
![Page 2: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/2.jpg)
2
Health Care Issues
Health Care Financing Trends President’s FY 2008 Budget Premium Conversion Medicare Employer Subsidy
![Page 3: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/3.jpg)
3
Health CareFinancing Trends
The Erosion of Employer-Sponsored Health Insurance
![Page 4: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/4.jpg)
4
Not Immune To Erosion of Retiree Health Benefits
Share of Employers w/ Retiree Coverage 1988: 66%* 2006: 35%*
Share of Employers w/ Worker Coverage 2001: 81.2% 2005: 77.4%
*Source: Kaiser/Hewitt study of large private-sector employers, 2006.Source: Wall Street Journal 1/19/07
![Page 5: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/5.jpg)
5
President’s FY ’08 Budget Health Savings Accounts (HSAs) in Federal
Employees Health Benefit Program (FEHBP):Expands HSAs in FEHBP, by allowing:
BC/BS to offer HSAs. “Indemnity Benefit Plan” to offer HSAs
Dormant since 1990Aetna former Indemnity FEHBP Carrier
![Page 6: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/6.jpg)
6
FY ’08 Budget: Health Savings Accounts in FEHBP
What’s Wrong with a BC/BS HSA?Most Popular & Largest FEHBP plan.Brand Loyalty & Marketing Clout.BC/BS HSAs could spike HSA enrollment.That means higher premiums/fewer benefits
for comprehensive plan enrollees. Systemwide Indemnity Plan HSA:
Would only make it worse.
![Page 7: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/7.jpg)
7
President’s FY ’07 Budget Base Retiree FEHBP Premiums on Length of
Service:Average Retiree/Worker Share: 29%.Retirees with less than 10 years would pay
more.Discourages mid-career recruitment.Similar to “Operation Offset”
2005 RSC Plan would have cut gov’t share for retirees w/ less than 30 years of service.
![Page 8: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/8.jpg)
8
Setting the Bar High
The Fight for
Premium
Conversion
![Page 9: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/9.jpg)
9
Premium Conversion
Rep. Tom Davis (R-VA) H.R. 1110
56 Cosponsors, including:*
Majority Leader Hoyer (D-MD) Oversight & Gov’t Reform
Committee Chairman Waxman (D-CA)
19 Members of Ways and Means (10 Ds & 9 Rs)
*As of March 20, 2007
![Page 10: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/10.jpg)
10
Premium Conversion
Senators John Warner (R-VA) & Jim Webb
S. 773 7 Cosponsors*
3 Finance Committee members (Rockefeller, Lott & Snowe.
*As of March 20, 2007
![Page 11: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/11.jpg)
11
So What’s New About...
Premium Conversion in the 110th Congress (2007-2008)?
![Page 12: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/12.jpg)
12
What’s New? Committee Chairman
House Ways and Means Committee
Senate Finance Committee
Charles Rangel (D-NY) Chairman
Max Baucus (D-MT), Chairman
Jim McCrery
(R-LA) Ranking Member
Charles Grassley (R-IA),
Ranking Member
![Page 13: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/13.jpg)
13
What’s New?Budget Rule
“Pay As You Go” (a.k.a. “Paygo”) Tax Relief Must be Offset by:
Revenue Increases, orProgram Cuts.
![Page 14: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/14.jpg)
14
What’s Old?
Premium Conversion Costs: $12 billion. $248 billion Federal Budget Deficit – ’06. Unknown costs of Wars & Homeland
Security. The Impending Fiscal Tsunami.
These guys will need a lot of Social Security benefits,
health care & long-term care
![Page 15: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/15.jpg)
15
What Else is Leftover?Politics of Premium Conversion
Many Lawmakers would like to support PC. But, they have to consider how non-feds feel
about Premium Conversion. No retirees anywhere receive PC tax benefit. Under H.R. 1110/S. 773, retired Members of
Congress get PC too. Concern about giving themselves a tax break
other retirees won’t get.
![Page 16: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/16.jpg)
16
How NARFE Should Respond
NARFE & Sen. Warner: Cutting PC’s $12 billion cost: Cap benefit with no affect on relief for 7-8 years. Annuitants get benefit through a “Flexible
Spending Account.” Open PC to all retirees
No retirees private or public have PC. Cost goes up, but PC for all removes one
obstacle.
OMB Director Portman &Senator Cardin (D-MD)
![Page 17: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/17.jpg)
17
Premium Conversion:Our Best Arguments
The cost is not out of line with how the tax code
is being used on health care.
Federal civilian and military retirees should be
rewarded for their sacrifices to our country.
Improvements in health care are incremental: H.R. 1110/S. 773 are a foot in the door for other
retirees.
![Page 18: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/18.jpg)
18
Medicare Employer Subsidy
![Page 19: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/19.jpg)
19
Medicare Part D Drug Benefit
2002 Congressional Budget Office: 1/3 of employers with retiree Rx coverage
would drop it in response to “Part D.” Medicare benefit inferior to FEHBP Rx. Subsidy proposed to encourages
employers to keep Rx drug coverage. NARFE key in making the Fed Gov’t
eligible for the subsidy.
![Page 20: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/20.jpg)
20
Medicare Employer Subsidy: Eligibility
Subsidies of 28% of the cost per enrollee age 65 and older.Employers Eligible for Subsidy:
Drug Benefit = or > Part DFederal, state and local governmentPrivate-Sector
![Page 21: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/21.jpg)
21
Medicare Employer Subsidy
2004: OPM and CMS staff met on FEHBP application for the subsidy.
2005: OMB Tells OPM not to apply for subsidy.
OPM says:Don’t need it: no plans to cut retiree Rx.Government shouldn’t pay itself.
![Page 22: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/22.jpg)
22
Medicare Employer Subsidy: OPM’s Arguments Have No Merit
OPM: “No plans to cut retiree Rx.”Eligibility not set by whether employer
intended to kept Rx coverage with or without subsidy.
OPM: “Gov’t shouldn’t be paying itself.” “Intragovernmental Transfers” not unusual.Example: Agency Payments to CSRDF.No Outlay – No Cost to Government.
![Page 23: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/23.jpg)
23
Result of Forgoing the Subsidy
$1 Billion a year that could have:
Reduced Premiums
Stabilized or Enhance Coverage
![Page 24: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/24.jpg)
24
Result of Forgoing the Subsidy
Jan. 2007 GAO Study (Sen. Akaka):Large FEHBP plan with a lot of elderly would
have had 3.5% to 4% lower premiumsAll FEHBP plans would be more than 2%
lower on average.Premiums more sensitive to Rx cost in the
future.
![Page 25: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/25.jpg)
25
Medicare Employer Subsidy: NARFE’s Response
Persistent Public Pressure on Administration:Press Releases NARFE Magazine ArticlesCalls and Letter from NARFE MembersMeetings w/ OPM Director(s) and Key Staff
![Page 26: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/26.jpg)
26
Medicare Employer Subsidy: NARFE’s Response
Assistance from Key Members of Congress:Rep. Tom Davis (R-VA)Sen. Daniel Akaka (D-HI)Rep. Danny Davis (D-IL)Rep. Eleanor Holmes Norton (D-DC)Sen. Charles Grassley (R-IA)
Rep. D. Davis
Rep. E. H. Norton
Sen. C. Grassley
![Page 27: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/27.jpg)
27
Medicare Employer Subsidy: NARFE’s Response
Conversations with staff of:Then-House Ways & Means Committee Chair
Bill Thomas (R-CA)Senate Finance Committee Chair Max
Baucus (D-MT)House Ways & Means Committee Chair
Charlie Rangel (D-NY)
Rep. Thomas
Sen. Baucus
Rep. Rangel
![Page 28: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/28.jpg)
28
NARFE’s Response in the 110th Congress
Sen. Akaka to hold hearings on the GAO Report this Spring.
President Baptiste will testify. After hearing NARFE will work with Sen.
Akaka on next steps.
Sen. Akaka
![Page 29: 1 NARFE’s Tenth Biennial Legislative Conference March 3-6, 2007 Health Care Issues](https://reader035.vdocument.in/reader035/viewer/2022081515/56649e685503460f94b64795/html5/thumbnails/29.jpg)
29
Health Care IssuesQUESTIONS AND ANSWERS