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Congress, Fearing 'Brain Drain,' Seeks to Opt Out of Participating in Obamacare's Exchanges

April 25, 2013

By Avik Roy

As Obamacare was winding its way through the Senate in 2009, Sen. Chuck Grassley (R., Iowa) slipped in an amendment requiring that members of Congress, and their staff, enroll in Obamacare’s health insurance exchanges. The idea was simple: that if Congress was going to impose Obamacare upon the country, it should have to experience what it is imposing firsthand. But now, word comes that Congress is quietly seeking to rescind that provision of the law, because members fear that staffers who face higher insurance costs will leave the Hill. The news has sparked outrage from the right and left. Here’s the back story, and why this debate is crucial to the future of market-based health reform.

Sen. Grassley’s original idea was to require all federal employees to enroll in the exchanges, instead of in the Federal Employee Health Benefits Program, where most gain coverage today. Indeed, a previous Senate Finance Committee amendment proposed putting members and staffers on Medicaid. But "fierce opposition from federal employee unions" sank Grassley’s effort, and he had to water his amendment down to only apply to Congress and congressional staff.

Staffers grumble about being stuck on the exchanges

Ever since Obamacare became law, this has been a source of grumbling among the congressional staffers I talk to. One aspect of the Grassley amendment is that it originally appeared to exempt staffers who worked for congressional committees, and congressional leadership, because those staffers didn’t work for specific Members of Congress. (My understanding is that the Office of Personnel Management has since clarified the regulations to include all staff, including committee and leadership.)

There are a couple of legitimate issues for Congress to resolve with this provision, formally known as Section 1312(d)(3)(D) of the Affordable Care Act. First: Will staffers have to buy insurance on the exchanges for themselves with after-tax money, or will the government be able to contribute to these costs with a pre-tax contribution? Second: In the past, the government’s sponsorship of health benefits for members and staffers counted toward retiree benefits. If these individuals are placed on the exchange, will their pensions will be affected?

According to the Congressional Research Service, Congress’ in-house think tank, the government can indeed contribute to members’ and staffers’ premium costs. "While it does not appear that the contribution must be similar to the contribution provided under FEHBP," CRS writes in a 2010 report, "it seems the section may provide the authority for the federal government to make a contribution to the health insurance premiums of Members of Congress and congressional staff. Under FEHBP…the government’s share of premiums is set at 72% of the weighted average premium of all plans in the program, not to exceed 75% of any given plan’s premium."

So Congress should have the authority to fund a comparable portion of the premiums as they do today. Staffers are waiting for a ruling from the Office of Personnel Management on precisely this point.

A bipartisan deal to rescind the provision?

According to John Bresnahan and Jake Sherman of Politico, however, Congress is seeking to wipe out these provisions and put members and staffers back onto FEHBP. "Several proposals have been submitted to the Office of Personnel Management," they write. "One proposal exempts lawmakers and aides; the other exempts aides alone."

What’s surprising about the effort to revive the exemption is that it appears to be bipartisan. According to the Politico reporters, talks to change the provision involve both Senate Majority Leader Harry Reid (D., Nev.) and House Speaker John Boehner (R., Ohio). "Everyone has to hold hands on this and jump, or nothing is going to get done," one source told the reporters. Several of their sources worried about a "brain drain" that would drive talented staffers off the Hill.

One subtle point needs to be made: Large employers in the private sector are not required to put their employees onto the Obamacare exchanges. Given that Congress is a large employer, this isn’t, in the purest technical sense, about subjecting Congress to the same laws it imposes on other large employers. But it is about subjecting Congress to the laws it imposes on those who will have to buy insurance on the exchanges: individuals who don’t get coverage through their employers, and small businesses.

Exchanges are crucial to the future of health reform

While I have many friends who work for Congress, and I wish them well, it is absolutely a good thing that members and staffers are enrolled on the exchange. It is vital for these individuals to experience, first-hand, how Obamacare’s costly mandates and regulations will drive up the price of health insurance. Staffers will, in particular, be affected by Obamacare’s "community rating" provision, which jacks up the cost of insurance for young people. (Most Hill staffers are in their twenties and early thirties.)

If anything, even more federal employees should be required to enroll in the exchanges, especially those at the White House and the Department of Health and Human Services who are writing thousands of pages of exchange regulations. (Indeed, a bill has been proposed that would extend exchange coverage to the President, Vice President, and political appointees.) It’s critical that those who design our laws get to experience them for themselves. I might also throw in the good folks at the Congressional Budget Office, who will get a better sense of how these regulations affect exchange costs and subsidies.

This may seem like a lot of inside baseball. But it’s actually a critical issue. If Obamacare can’t be repealed—and it is my view that repeal is highly unlikely—then the future of market-based health reform goes through the exchanges. Getting private insurance exchanges right is important, if we want to use them to reform Medicare, Medicaid, and our other health-care entitlements. And the best way to make sure that we get the exchanges right is to make sure that the people who write the laws are also living under them.

Original Source: http://www.forbes.com/sites/aroy/2013/04/25/congress-fearing-brain-drain-seeks-to-opt-out-of-participating-in-obamacares-exchanges/

 

 
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