Friday, September 20, 2013


The Washington Post reports that the House of Representatives did pass essentially along party lines a continuing resolution (H. Jt. Res. 59) funding federal government operations -- excluding the Affordable Care Act -- through December 15, 2013. The Hill reports that the White House is seeking meetings with Congressional leaders to avoid a government shutdown on October 1. This us going to come down to the wire in all likelihood.

Yesterday, the Senate Homeland Security and Governmental Affairs Committee held a hearing on Postal Service reform. At the hearing, the Postmaster General testified that
The Postal Service has reached its statutory debt limit of $15 billion and it held unrestricted cash representing only 11 days of average daily operating expenses. Current projections indicate that it will continue to have a dangerously low level of liquidity in the foreseeable future. The Postal Service will be unable to make the required $5.6 billion Retiree Health Benefits (RHB) prefunding payment due by September 30, 2013. This is in addition to similar payment defaults on $11.1 billion in 2012. Our cash position will continue to worsen in October 2013, when the Postal Service is required to make its annual payment of approximately $1.4 billion to the Department of Labor (DOL) for workers’ compensation expenses. By mid-October 2013, the Postal Service projects it will have a cash balance on hand of approximately five days of average daily expenses. For an organization the size of the Postal Service – which has revenues of $65 billion and a total workforce of approximately 490,000 career employees – that is a razor thin margin.
The American Postal Workers Union President and the Rural Letter Carriers Association made good constructive points in their testimony.  The Senate HSGA Committee will be holding a second hearing on this topic next Thursday. Federal News Radio reports that the Committee "is set to take on the Postal Service's healthcare benefits more broadly at" this hearing.

The Washington Post also took note of the fact that OPM may be without an acting director soon. The Post added one fact that the FEHBlog's post failed to note -- OPM has not had a deputy director since July 2011.

The S&P Healthcare Indices for July 2013 were released today:
Four of the nine S&P Healthcare Economic Indices showed the same annual growth rates for July 2013 as for June 2013 [3.06%]. They were the Composite Index, the Medicare Index, the Commercial Index, and the Hospital Medicare Index As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.15% in July.  Annual growth rates in Medicare costs increased by 1.40% in July, according to the S&P Healthcare Economic Medicare Index. The Hospital Medicare Index’s growth rate recorded 2.29% in July. These indices’ growth rates remain flat from June to July
On a similar note, Business Insurance reports that
In 2012, total U.S. health care spending hit $2.807 trillion, or $8,948 per person. While a record, expenditures rose only 3.9% in 2012, the same percentage increase as in 2011, 2010 and 2009, according to statistics compiled by researchers at the Centers for Medicare and Medicaid Services and published in the journal Health Affairs.
The CBO discussed this rather low (yet above the CPI) spending rate in his blog.  He makes three points:

  1. Growth in spending for the fee-for-service portion of Medicare has slowed markedly in the past few years—apparently not because of the financial turmoil and recession but because of other factors affecting the behavior of beneficiaries and providers.
  2. The slowdown in health care cost growth has been sufficiently broad and persistent to persuade us to make significant downward revisions to our projections of federal health care spending.
  3. Despite the recent reductions in our projections of federal health care spending, growth in such spending remains the central challenge in putting the federal budget on a sustainable path.

The abstract for the Health Affairs article adds
Improving economic conditions, combined with the coverage expansions in the Affordable Care Act and the aging of the population, drive faster projected growth in health spending in 2014 and beyond. Expected growth for 2014 is 6.1 percent, with an average projected growth of 6.2 percent per year thereafter. Over the 2012–22 period, national health spending is projected to grow at an average annual rate of 5.8 percent.
Cost curve up. Next week OPM should announce the FEHBP's 2014 average premium and government contribution changes.

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