The Federal Employees Health Benefits Program (FEHBP) provides comprehensive health insurance coverage to approximately 8.2 million federal employees, retirees, and their family members. In fact, it is the nation’s largest employer‐sponsored health insurance program. For 2016, health insurance premiums increased an average of 6.4%, with some participating health insurance plans increasing their premiums by larger amounts. With the three-year pay freeze (2011, 2012, and 2013) and the last three years of negligible pay increases (1% for 2014 and 2015, and 1.3% for 2016) many FDA employees are finding it increasingly difficult to continue to afford their health insurance coverage. Some FDA employees are experiencing larger increases in premiums than they are receiving in overall pay raises, leaving them with ever‐declining take‐home pay. And, all FDA employees and retirees are absorbing higher out‐of‐pocket costs in the form of larger co‐pays and co‐insurance for office visits, procedures, and prescription drugs, as well as increases in catastrophic coverage levels.
NTEU believes that savings could be found in the FEHBP by allowing the Office of Personnel Management (OPM) contract directly for pharmacy services. Currently, FEHBP plans independently contract with Pharmacy Benefit Managers (PBMs) who negotiate prices with drug companies and pharmacies for each individual plan. The rebates and discounts that PBMs receive from drug manufacturers are retained by the PBMs and health plans instead of being returned to the FEHBP. Because approximately 30% of all costs in the FEHBP program are for prescription drugs—roughly $48 billion annually—adopting this contracting reform could produce significant savings for both the federal government and program enrollees. The President’s Fiscal Year 2017 budget includes a legislative proposal on these contracting reforms that would produce a $1.4 billion dollars in savings over ten years. Similarly, H.R.2175, introduced by Rep. Stephen Lynch (D‐MA), would ensure fair prescription drug contracting and pricing practices in the FEHBP.
Some past proposals under consideration by Congress have suggested turning the FEHBP into a voucher plan and providing enrollees with a fixed dollar amount each year toward their health benefits – regardless of the amount of annual premium increases or the true rise in health care inflation. Others have proposed altering retiree or eliminating employer‐sponsored health insurance benefits entirely for the federal workforce. Not only do FDA employees and their family members rely on the FEHBP to provide comprehensive health care benefits, but FDA and other federal agencies need to offer a package of health care benefits that will attract and retain a skilled and talented workforce.
NTEU urges that Congress:
- Adopts the commonsense prescription drug contract and implement cost‐saving reforms in the FEHBP by supporting H.R. 2175
- Opposes all efforts to shift further costs to enrollees or to alter the existing benefit structure or current formulas
Please contact your members of Congress and ask them to support FDA and its employees.