Federal Employees News Digest

WH pushes feds to pay more for retirement, healthcare

The current administration in recent weeks has shifted its focus toward public pronouncements back to one that has come up time and again: that it plans to develop—in an unspecified time-frame—healthcare plans that will be much better and cost-effective than the backstop plans available under the government-overseen Affordable Care Act, a.k.a “Obamacare.”

“The Trump Administration is working on realistic solutions to provide Americans with the options and control they want, the affordability they need, the ease they expect, and the quality they deserve, rather than forcing a government takeover of the healthcare system,” the White House announced in an April 10 press release. “We will protect people with pre-existing conditions, lower prices for care and prescription drugs even further, end surprise medical bills, and make sure Americans get the absolute best quality of care.”

Meanwhile, this administration’s proposals for federal employee job benefits continue to be described in equally glowing terms. But—potentially more alarming to feds, as they would impose a greater burden, and soon—these plans are not as vague. They propose to force feds to contribute more money both toward their retirement savings and health insurance and healthcare out-of-pocket costs.

Two years ago, health insurance costs in the Federal Employees Health Benefits Program went up an average of 4.4 percent for feds. The next year, feds saw another 1.5 percent average increase, according to government figures, in their health insurance premiums. And yet the solutions that the current administration proposes—including that FEHB health insurance companies should simply offer more plans to drive down costs—do not seem to be on-point to get at the problem, according to many experts.

One such expert, a labor economist, that FEND recently spoke with, just doesn’t see much hope for reducing healthcare costs for feds—or for the general public—via sticking to such small steps. 

“We need to really dig down, and find the economic things that need to be done,” Lawrence

Boyd, who researches labor economics the University of Hawaii, told FEND. “We need to reform the economy to get back on a track of economic growth—solid growth, with median income growing with economic activity, rather than it be taken away.”

“And that’s where healthcare comes in. It’s actually simple—the greatest single thing, reform, we could do toward this end, that is to provide the greatest boost to income and health, is to reform our health care system more profoundly.” Boyd continued. “The current system is not optimal, and health costs are the biggest input into bankruptcies. If we instead [funded it through government] and made service access free without co-pays, essentially what that does—if it were state-run—would be to take some really excessive labor costs off the table and give wages and income a boost, improving the whole economy.”  

“People do not understand how powerful this reform could be,” he continued. “In Canada, where health insurance is state run, the labor costs are much lower—30 percent or more less, when you include [actual costs] such as healthcare—because the savings that come with the single payer system,” he said. “Canada’s economy looks like a lot like the US did prior to 1970—it’s in better condition, with unions as a bigger presence, and the country has a pretty decent and more reasonable income distribution.”

“The savings on health care alone significantly helped Toronto to really become a much more  important manufacturing center in North America over the years,” he added.

Reader comments

Mon, Apr 15, 2019

Definitely should go ahead and more to a government healthcare. Maybe lower the age for Medicare over time, like some in Congress are suggesting. That would get us there.

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Edward A. Zurndorfer Certified Financial Planner
Mike Causey Columnist
Tom Fox VP for Leadership and Innovation, Partnership for Public Service
Mathew B. Tully Legal Analyst

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