Midweek Update

The President's Deficit Reduction Commission released its report today. One of the recommendations is to cap the exclusion on employer contributions toward health care coverage and reduce the Affordable Care Act's high cost plan excise tax (a/k/a the Cadillac Tax) from 40% to 12%. Another recommendation is to use federal employees as guinea pigs to test a premium support system for the FEHB Program. As it stands the FEHB Program is a defined contribution program. The government contribution is the lesser of 72% of the enrollment weighted average premium or 75% of the selected plan's premium. The Federal Times explains that "Under this [recommended premium support system], federal employees would receive a fixed subsidy from the government they can use to purchase health insurance from competing insurers. The subsidy would grow by no more than the gross domestic product, plus one percentage point, each year. This could save $2 billion in 2015 and $18 billion through 2020."  This recommendation, like most others in the report, require Congressional and Presidential approval via a change in current federal law.

Last week, the Mercer benefits consulting company announced that "Growth in the average total health benefit cost per employee, which had slowed last year to 5.5%, picked up steam, rising 6.9% to $9,562, the biggest increase since 2004, according to the latest National Survey of Employer-Sponsored Health Plans, conducted annually by Mercer (for more information, visit http://www.mercer.com/2010-health-plan-survey). Health benefit cost rose three times faster than the CPI in 2010."  This increase (plus the FEHB Program's demographics) helps explain the average FEHB Program premium increase of 7.2% for 2011.

OPM released its financial statements and performance reports for fiscal year 2010 (which ended on September 30, 2010) yesterday.  FEHBP junkies will find interesting reading beginning at page 101. An improper payments report begins on page 123. FEHBP’s improper payments for FY 2010 are put at $91.1 million or 0.2% of the total spend.  The FEHBP’s improper payments rate is dramatically lower than the government-wide improper payments average of 5.49%, Medicare’s 10.5% ($34.3 billion), Medicaid’s 9.4% ($22.5), and Medicare Advantage’s 14.1%.

The Leapfrog Group issued its annual top hospitals list today, which includes 65 facilities across the country out of 1200 reviewed.