Because You Know What You Want to Hear More About? FEHBP.

After seeing Brad's decided lack of enthusiasm about using the federal employee health benefits plan (FEHBP) as the starting point for increased coverage, I spent some time looking into the program. It's worth saying, first, that the authors of the CAP plan are pretty progressive folks, so they're not trying to derail universal health coverage by using a cruddy coverage mechanism that'll simply turn people off from government involvement.

Anyway, the fruits of my googling were a few think tank papers mainly blasting FEHBP for skyrocketing premiums that were forcing users into cheaper plans. The AFL-CIO's paper believes -- surprise! -- that a primary answer is allowing workers to better bargain with their employers. This has done the job for postal employees, but it doesn't really help us here. They also reference a bill by Steny Hoyer that'd increase the governments share of FEHBP costs from a max of 75% to a max of 83%. Probably helpful. The paper from Families USA just castigates them for premium increases and warns against using FEHBP as a basis for Medicare. So the main complaint seems to be prices and a weak administration.

In addition to the think tanks, I searched the usual suspects of Brad DeLong and Max Sawicky, but turned up with nothing on either site. Brad, however, had recommended this health care primer by Uwe Reinhardt, who certainly seems sold on FEHBP. Nevertheless, I'd love to hear the smart kids chime in. Brad? Max? Angry Bear'ers? How about it?

So what have we got? A bunch of Democrats proposing the expansion of a plan that seems to screw its users. Kind of odd. I think the fix -- theoretically -- hits here:

The affordability of health insurance is overwhelmingly named as the reason why Americans lack health insurance. 22 To address this, the plan would ensure that nobody pays more than a certain percentage of income (for example, 5–7.5 percent) on health insurance premiums. This protection, administered as a refundable tax credit, would apply to employer-based health insurance as well as private insurance obtained through the pool.

If premiums can't move you past a certain percentage of income, than skyrocketing costs can only hurt you so much. That said, I don't quite understand how this'll work. FEHBP allows users to enter into a wide variety of plans, some expensive, some less so. So what's to stop lower-income employees from all choosing the most expensive plan in the hopes that it'd blast their cap and give them more for much less? From what I can tell, Podesta and Co. have proposed a fix, but not one with much hope of working. Maybe those more versed in economics than I could figure this one out (see above plea to smart kids), but, as written, it looks entirely unworkable to me. My best guess is that it's sweetener thrown in with the knowledge that it couldn't, unless heavily modified, pass, but considering our minority status, sounding good is just as important.

That said, FEHBP's problems, at least in my research, seem pretty standard. Costs jumped up, but not more so than they did in the private market. And the AFL-CIO feels the program is bullied by insurance companies. But that strikes me as a management issue with the OPM. If FEHBP does become the standard for insurance, pharmaceutical and insurance companies will have no chance but to work with them, and strong negotiators can negotiate strong contracts. So, from my reading, FEHBP seems eminently fixable. If you could create some sort of income cap (maybe by dictating that the plan you use could only be X percentage of your income in order for you to qualify?), you'd solve the cost issue. If you could give the OPM a spine, they wouldn't be easily bullied. And more people would have access to health care.

As I said before -- I like it.

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