Weekend update

Well the Federal Benefits Open Season is now over and it appears that the lame duck session will not accomplish much as the President and the Speaker are having a hard time reaching a compromise solution to the fiscal cliff created by last years debt ceiling increase law and the end of the Bush era tax cuts. Nevertheless, the Hill Floor Watch blog outlines the work that Congress has planned for this week while cliff negotiations continue.

Kaiser Health News provides insights on how going over the cliff, e.g., the mandatory sequestration affect health care programs, like Medicare. Going over the cliff would not impact the FEHBP directly because the Program is funded by the Employee Health Benefits Fund held in the U.S. Treasury. Government and employee contributions toward FEHBP coverage are deposited into this fund. However, the FEHBP would be adversely affect indirectly by for example federal employee layoffs or the 2% cut in Medicare payments (as doctors would expect the FEHBP to pick up the slack.)

Speaking of FEHBP funding, the FEHB Act requires a 4% surcharge on premiums -- 3/4s of the surcharge is placed in a contingency reserve to stabilize premiums and 1/4 is available to OPM for its FEHBP administrative expenses. OPM typically uses only a portion of the available funds (less than 1% of premiums) and any balance is returned to the plans again to stabilize premiums.

The FEHBlog has been reviewing the flood of ACA regulations that have been issued since the election. One proposed rule which is several hundred pages long and is titled 2014 parameters for qualified health  plans participating in the exchanges is a real humdinger. It explains the Rube Goldberg like scheme of risk adjustments, risk corridors, and reinsurance arrangements to stabilize the exchanges. As the Washington Post notes, the charge that HHS plans to make to reimburse its exchange administrative costs is 3.5% of premiums or almost as much as the entire FEHBP surcharge which both stabilizes the Program and funds OPM's administrative expenses. How is the law ever going to bring down the health care expense curve?