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."

Here is the text of the letter from Congressmen Connolly and Moran to

House Speaker Pelosi:

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

Source: href="http://connolly.house.gov/index.cfm?sectionid=44&sectiontree=6,44&itemid=238"

target=_blank>connolly.house.gov