In a letter to House Speaker Nancy Pelosi, Northern Virginia Congressmen Gerry
Connolly (D) and Jim Moran (D) expressed concern that the proposed excise tax on
health insurance providers adopted by the Senate Finance Committee in its health
insurance reform bill may adversely affect health coverage for federal employees
and retirees.
Connolly and Moran said data compiled by the Congressional Research Service
on the impact of the Senate Finance Committee's proposed excise tax threshold
indicates that the typical cost for federal employees and retirees enrolled in
Federal Employees Health Benefits Plans (FEHBP) is already bumping up against
the proposed 2013 threshold and those costs are only projected to increase.
"Throughout this year, we and members of the Administration have assured the
public, including 2 million federal employees, that if individuals or families
like their current health coverage, they will not have to change," the two
congressmen said. "The current proposal from the Senate Finance Committee
could undermine that tenet of health insurance reform."
In their letter, Connolly and Moran urged Speaker Pelosi "to carefully
scrutinize this and other provisions of reform to ensure they do not adversely
affect the Federal Employee Health Benefits Plan."
October 20, 2009
The Honorable Nancy Pelosi
Speaker
United States House of
Representatives
Washington, DC 20515
Dear Speaker Pelosi,
Thank you for your leadership in advancing health insurance reform
legislation that will reduce costs, extend coverage, and improve not only the
quality of care but also the quality of life for all Americans. As we
continue deliberations on this landmark legislation, we would like to highlight
a new concern that the proposed excise tax on health insurance providers adopted
by the Senate Finance Committee may adversely affect health coverage provided
through the Federal Employees Health Benefits Plan (FEHBP).
Just like all Americans, federal employees and retirees are struggling to
keep up with the rapid growth in health care costs. In fact, premiums under
FEHBP are anticipated to increase another 8.8 percent next year. Earlier this
year, the Committee on Oversight and Government Reform held a hearing
highlighting the increasing costs of prescription drugs and the disproportionate
impact on FEHBP, in which enrollees are older than the average private sector
employee. Protecting and improving the benefits -- particularly the health
benefits -- of federal employees is critical to our success in retaining and
recruiting a skilled workforce.
As you are aware, the Senate Finance Committee proposal would levy a 40
percent tax on the aggregate value of insurance plans that exceed a certain
threshold - $8,000 for individuals and $21,000 for families starting in 2013. It
is our understanding that, in addition to basic health care premiums, coverage
for dental, vision or other supplemental programs as well as contributions to
flexible spending accounts (FSAs) would count toward that threshold amount. The
threshold limits would increase annually by a factor of the Consumer Price Index
plus 1.
For the purpose of comparison, the Congressional Research Service
adjusted those proposed thresholds into 2010 dollars, using the Senate Finance
Committee's methodology, to assess the impact on current FEHBP health care
plans. The adjusted threshold for an individual health plan, for example, would
be $6,500. Today's average insurance premium for an individual health plan
within FEHBP is $6,000. When coupled with dental and vision coverage, today's
average FEHBP plan costs between $6,303 and $6,697, easily exceeding the
adjusted threshold. When the average employee FSA contribution of $1,300 is
included, the cost falls between $7,603 and $7,997. This clearly indicates that
those plans considered average by FEHBP standards, and certainly those
considered above average, could be subject to the excise tax proposal. In fact,
today's cost for a typical FEHBP health care plan is already bumping up against
the proposed 2013 threshold, and those costs are only projected to
increase.
Throughout this year, we and members of the Administration have assured
the public, including more than two million federal employees, that if
individuals or families like their current health coverage, they will not have
to change it. The current proposal from the Senate Finance Committee could
undermine that tenet of health insurance reform. We share your commitment to
improving upon the existing health insurance system, and we urge you to
carefully scrutinize this and other provisions of reform to ensure they do not
adversely affect the Federal Employee Health Benefits Plan.
Sincerely,
Gerald E. Connolly
11th District, Virginia
James P. Moran
8th District, Virginia
Overview - CSRS
