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</p>While Congressional leaders are feverishly plotting to jam the hugely unpopular Senate health bill through the House of Representatives, the moment Speaker Pelosi thinks she has the votes, House liberals are also tinkering around with the Federal Employee Health Benefits Program (FEHBP). This is the program that covers federal workers and retirees; it is a consumer driven program of competing private health plans. Congressional liberals would like to make it look a lot more like Obamacare.
Historically, the success of the *FEHBP as a consumer-driven and competitive system of private health plans has been largely attributable to its wide range of personal choice, relatively light regulation, and the hands-off approach the Office of Personnel Management(OPM) in its administration. That can change, of course, depending upon who is running the White House.<spanid="more-28208"></span>
Yet, <ahref="http://www.heritage.org/Research/HealthCare/bg2364.cfm">as we have said before, the powers of OPM are neither limited nor restricted to those which it actively exercises.* OPM does not interfere with the health plans offered in the FEHBP by micromanaging the program or imposing price controlsbut that is not to say this must be the case.* In fact, as <ahref="http://www.rollcall.com/news/43716-1.html?type=printer_friendly">Walter Francis outlines in Roll Call, new legislation (H.R.4489) would overturn the current system for something much different.
This measure is based on the false assumption that FEHBP health plans- all private plans, by the way-spend too much on prescription drugs by contracting with Pharmaceutical Benefits Management firms rather than contracting directly with drug manufacturers. So, basically, the federal government would stop private firms from contracting with each other. **But <ahref="http://www.rollcall.com/news/43716-1.html?type=printer_friendly">Francis points out that the Congressional Budget Office( CBO) has found that the substitute in this case- *government contracting, or in reality, price fixing- *would net no real savings.* In fact, the FEHBP has done as good as or better of a job than any other federal program at containing costs.* Francis argues that FEHBP outperforms original Medicare- a program generating fiscally disastrous debt- and has done for several decades, proving that a consumer-driven market for private health insurance is effective at containing costs and securing consumer satisfaction.
But the proposed legislation would be disastrous for the FEHBP, undermining both market competition and consumer choice.* <ahref="http://www.rollcall.com/news/43716-1.html?type=printer_friendly">Says Francis:
The bill would debar CVS Caremark and other firms that combine PBM and pharmacy functions from contracting with any FEHBP plan and would prohibit health-based drug substitution recommendations that did not lower costs. It would also require payment at whatever prices manufacturers charged, would impede the collection and dissemination of information on drug utilization to the Food and Drug Administration and the National Institutes of Health, would have OPM set dispensing fees for FEHBP sales in every pharmacy in America, and would impose an immense array of paperwork burdens on manufacturers, PBMs, and pharmacies.The net effect of these restrictions would be to reduce competition (many PBMs would not or could not bid on FEHBP plan contracts), to raise manufacturer prices to all purchasers including the VA, and in these and other ways to raise prescription drug costs in the FEHBP. OPM, an agency without any competence or expertise in wholesale or retail prescription drug management or in administering national price controls, would administer all these functions.
Yep. These are the folks who want to micromanage one sixth of the American economy. It is not federal employees and retirees alone who should worry about the impact of this legislation on the FEHBP.* The giant Senate health bill would allow OPM to sponsor select health plans to compete nationwide against private health plans in the newly-created, federally designed health insurance exchanges.* These government sponsored plans and the new role of OPM would be very different, and the health insurance markets would be very different <ahref="http://www.heritage.org/Research/HealthCare/bg2364.cfm">instead experiencing the yet-unleashed powers of the OPM.* Given the policies embodied in H.R.4489, the FEHBP would be saddled with a new layer of government regulation, an ominous harbinger for what could come to pass under the Senate bill.