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Executive Memorandum #369 on Social Security

November 9, 1993

Why the Clinton Administration Will Be Exempt from the Clinton Health Plan

By


(Archived document, may contain errors)

1 .'9/93 369

WHY THE CLINTON ADMINISTRATION WILL BE EXEMPT F110M THE CLINTON HEALTH PLAN

The Clinton Administration is very sensitive to nine million special Americans who are anxious about being included in the Administration's proposed national heal th care plan. 7bese worried Americans are Administra- tion officials, the White House staff, Members of Congress and'their staff, and other federal workers and federal retirees, as well as their families. In fact, the Administration is so sensitive that i t intends to let them stay out of the plan-at least until it has been tested successfully on the rest of America., It is not hard to understand why federal employees were so alarmed. The White House originally decided that federal employees covered by the F ederal Employee Health Benefits Program (FEHBP) would be folded into the new system of state-sponsored "health alliances." But in the health alliances, these public servants would have to accept a standardized package of health benefits. like the general p ublic. Currently they can choose a wide range of benefits to suit their needs. In the health alliances, federal workers would be restricted to a few in- surance plans providing this one-size-fits-all package. Currently federal employees and retirees typic a lly have ten to twenty very diffemt plans to choose from. They can choose plans each year during the period known as "open season," which started yesterday and lasts just over one month. And they would have to pay their sham of the cost of a "good Fornme 5 00 plan," as the Admini t- puts it. Currently, they can pick a less expen- sive streamlined plan if they wish. Advocates for the federal work force lost no time in informing the. Administrafion of the plight of Members of Congress, cabinet secretaries, an d the other federal workers and retirees. Among the remonstrations, were let- ten from Representative William Clay, the Missouri Democrat who heads the, House committee responsible for the FEHBP, and James King, who as Dire= of the Office of Personnel is r e sponsible for run- ning the program. Worried Federal Workers. King drew particular attention to the uncertainty and confusion felt by families in the federal work force. As King explained in a September 17th letter to Hillary Rodhani Clinton: In an enviro n ment where workforce reductions and other potential changes are already creating uncertainty and anxiety [among federal workers), it is more that the trandtion occur successfully and without disruption. King's solution? Calm the worries of federal workers by forcing other uncertain and anxious Americans to go first. Wrote King: I think it is important that the FEHBP population be given the opportunity to see that muonal health reform is working before they are tranutioned into it. Mrs. Clinton agreed. So w h ile stedworkers in Pennsylvania and farm workers in Iowa are scrambling to find out what the plan will me4w to them and how it will affect their job security and bealth cam costs, federal work- ers and lawmakers can rest assured that their lives and - - w i ll not be disrupted by the plan. In the leg- islation presented to Congress lot month, the FEHBP is to continue until January 1998, when the rest of Amer- ica is scheduled to be under the Clinton prograuL Congress and the White House will by then be able to deter-

mine if it actually works and if is good enough for federal workers. If it is.deemednotto be, legislation could be passed in 1997, safely after the 1996 election, to continue the FEHBP indefinitely. Simple and Successful. Some Members of Congres s believe, in contrast to the Clinton Administration, that if federal workers and Administration officials are'so desperate to keep the FEHBP for themselves, perhaps that program might be a better basis for a national program than the plan the White House wants to impose on the rest of America first. Indeed, as James King's letter itself points out, the FEHBP has been identified by many as the "living model" of needed reform, thanks to such features as full portability of benefits and consumer choice of be nefits.

The legislation creating the FE-HBP, moreover, is'just 26 pages-longi compared with 1,342 for the Clinton plan. The entire FEHBP, which spans the nation, is run by just 144 federal officials, compared with the Administration's estimate of 50,000 bu reaucrats merely for staffing the health alliances. Since the FE11BP now covers over nine million Americans, expanding a version of it to cover all Americans likely would require no more than 4,000 officials. And the rate of premium increases in the FEHBP over the last fifteen years have aver- aged one-third less than in corporate-sponsored plans. Federal workers now picking their coverage for next year face an average premium hike of three percent, barely above inflation, and some 40:percent will enjoy lo w er premiums for the same coverage. Senator Don Nickles of Oklahoma and Representative Cliff Steams of Florida, both Republicans, are ready- ing legislation to be introduced shortly which would, in effect, let the rest of America into an improved version o f the program that the Administration intends to keep for itself and other federal workers. Under the Nickles- Steams legislation, ordinary Americans would receive refundable tax credits to offset the cost of a health care plan provided through their place of employment or from another source, such as their union. They would be able to pick the benefits that are right for them, rather than a standardized package, just as federal workers are doing right now under "open season." Their plan would be completely portable, and they could not be excluded from any plan because of a pre-existing condition. The Clinton Administration's legislation, by contrast, creates one set of rules for those who govern, and an- other, inferior, set of rules for those who are gover n ed. Ordinary Americans will be the guinea pigs to test a health plan that federal workers and Members of Congress will not have to join until and unless the test results are satisfactory. The White House is, in effect, forcing Americans to dine at a resta urant in which the chef and the waiters will not eat the food. Stuart M. Butler Vice President and Director of Domestic Policy Studies

For further information: Robert E. Moffit, "Why Federal Unions Want to Escape the Clinton Health Plan," Heritage Foundatio n Backgrounder No. 953, August 4,1993. Robert E. Moffit, "A Guide to the Clinton Health Plan," Heritage Foundation Talking Points, forthcoming.

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