Employee Health Coverage

The Federal Employees Health Benefits Program (FEHBP) is a system of "managed competition" through which employee health benefits are provided to full-time permanent civilian government employees and qualified retirees of the United States Government. The FEHBP allows insurance companies and employee associations such as labor unions to develop health, dental, and allied plans to be marketed to governmental employees.

These plans are available to employees during an "open enrollment" once probationary status has been passed by a new employee, during which time the employee, if accepting enrollment, will be covered fully in any plan he or she chooses without limitations regarding pre-existing conditions. After the initial enrollment, changes can be made only upon a "qualifying life event" such as marriage, divorce, adoption or birth of a child, or change in employment status of a spouse, or during the annual "open season," during which employees can enroll, disenroll, or change from one plan to another. The exact dates of the open season change from year to year, but are basically from the Monday of the second full week in November through Monday, the second full week of December.

Premiums vary from plan to plan and are paid in part by the employer (the U. S. Government agency that the employee works for) and the remainder by the employee: the employer pays an amount equal to 72 percent of the average plan premium for self-only or family coverage (not to exceed 75 percent of the premium for the selected plan), and the employee pays the rest. Certain employees (such as postal workers) have a higher portion of their premiums paid as the result of collective bargaining agreements.

Some plans, particularly the one offered by some employee unions such as the National Association of Letter Carriers, and by the Blue Cross and Blue Shield Association on behalf of its member insurers, are nationwide; others are regionally-available plans such as HMOs. The FEHBP is open to members of United States Congress; in the 2004 presidential campaign, Senator John Kerry proposed opening enrollment in this plan to all Americans.

A chief criticism of this program's legislation and management is that the purchasing power of the Federal Government is not utilized to draw down premiums and expand coverage. This controversy is similar to that which surrounded legislation for the Medicare Prescription Drug Coverage passed during the George W. Bush Administration. In the FEHBP, the Federal Government sets standards that, if met by an insurance company, allows them to participate in the program. The result is numerous competing insurance plans that are available to Federal Employees, but which vary only marginally in price and coverage, and which results in choice overload. Additionally, such a situation tends to favor the larger, more well-known plans because the consumer will opt for them if unable to make an informed decision. Instead, it has been proposed that the Federal Government give notice that it is interested in only offering a few plans for Federal employees to choose from, and that it would accept bids from companies for the best proposals possible. The benefits of such a process would be lower costs to the Federal Government and employee, and greater health coverage under the plans. The insurance industry generally opposes such ideas due to the resultant loss of profit. In addition, many companies would not be able to participate in the program unless they were part of a large cooperative plan that was accepted as a winning bid by the Federal Government.

See also

• Health insurance in the United States

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