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Federal Employees News Digest : May 13, 2013
May 13, 2013 Vol. 62, No. 41 3 Visit us on the Internet at www.FederalDaily.com tion is about penalizing smokers and oth- ers in the name of wellness. A lot of health plans are doing this kind of thing, but that doesn't mean it's a good idea. The proposal to make smokers and overweight feds pay higher premiums has ruffled feathers among critics, and was highlighted in AFGE's response. But isn't that happening already---for instance, won't a smoker's penalty be imposed under the Affordable Care Act, aka Obamacare? Francis: No, not really---that's a myth. It's going to happen very seldom---and [even then] it's a part of Obamacare that might be struck down by the courts. There are two kinds of "wellness programs" in health insurance. One, call it "Type A," the positive incentive, is where you commit to going to a gym and attending stop-smoking classes, so that the insurer gives you a break or a bonus---a free dental visit or something. The other, call it "Type B," says if you don't stop smoking and prove it, your premium will go up by 25 percent. The best research and evidence shows that neither approach works. People at best go through the motions for a while, but they don't change long term for such modest incentives. And, frankly, bigger incentives or penalties are not likely to work either. Let's say you do impose a high penalty---so, you're going to severely penalize people who can't perform at the gym? Really? That's morally question- able. The main problem here is that wellness programs in general---at least programs like these---have not been shown to accomplish much, and most claims that they do are puffery, and without any real foundation. So, you're saying that news accounts reporting that such incentives work are erroneous? Francis: Yes. But it's not me saying so, it's from [scientific] research---for instance, in a recent issue of Health Affairs [March 2013, Ed.]. Success stories for this approach are promoted by HR administrators, but no one has demonstrated them to be effective. And such "incentives" risk penalizing people who cannot control things that ail them. House Delegate Eleanor Holmes Norton [D-D.C.] recently noted that FEHB pre- miums rose 7.7 percent on average each year over 10 years, versus 9.3 percent for the average American health insurance plan. Doesn't this difference show FEHB is already efficient---and maybe not in need of an overhaul? Francis: Yes, FEHB is a very efficient and effective health program---I wrote a book on it [supporting that finding]. It's competi- tive. Plans compete on service, benefits and cost to attract enrollees. So, plans compete, and enrollees choose, and better offerings attract more enrollees. However, there are things about FEHB that need fixing. But to my mind, adding wellness programs--- already widely in use---is just not one of them. To be clear, I have not seen legislation or [detailed] administrative language on these proposals. You say FEHB is competitive. But Rep. Darrell Issa [R-Calif.], at an April House hearing, said that although FEHB is in some ways a "model" program, he judges it as "not having as open a process or as much competition as we could have." The OPM proposal's solution is to permit more---and more types---of plans to com- pete in FEHB. Bottom line: would this add real competition, and reduce costs? Francis: By law, the FEHB cannot admit any new national plans. The program can and does admit HMOs and similar [state] plans, willy-nilly. Now, OPM is proposing that FEHB would add a different kind of plan to the statute---the "regional PPOs," which they say would create more compe- tition and lead to savings. But there's con- troversy on this. Blue Cross/Blue Shield says it won't work, and instead will tend to cause cherry-picking and "adverse selec- tion." On the other hand, another health insurance company says regional PPOs would help boost competition. One way or the other, to my mind, the program could use more plans competing. But whether the proposal is the best way to get there really remains open to question. OPM's director of planning, Jonathan Foley, testified about regional PPOs, saying there would be definite savings. But you just said adding more types of plans may not help. If this particular OPM proposal won't increase competi- tion or improve the program, exactly what would? Francis: So, on the proposal to add more types of plans, the issue is complex. Both UnitedHealth and Aetna are already offering products in many cases available in more than half the states---so that's virtually like having national plans, really. And yet---and here's the problem from OPM's perspective, which I appreciate--- these companies just have not made real inroads against Blue Cross/Blue Shield plans. People aren't joining. So adding national plans likely won't gain many takers, you mean? Francis: Yes, that's right. But the question is, what's wrong with that? Maybe there's a good reason that offering more and differ- ent plans hasn't been catching on---maybe the "Blues" are cutting costs so well within good plans that the question becomes: How much better can you do on this? How much more can you save? It's becomes a chicken and egg problem. These plans are managed very well, and they are aggressive in keeping their costs under control. If adding new types of plans so far won't deliver real savings, then what might be the real solution to cutting costs further while maintaining good plans? Francis: One of the biggest problems is this: Though there is an open season every continued from page 1 Don’t miss our discussion of weekly news topics. Discuss these stories and more with your fellow federal workers at www.FederalSoup.com. continued on page 4
May 6, 2013
May 20, 2013