Patients Bill of Rights Plus Act  S.300

Section 504 of this bill gives FEHBP enrollees a choice they do not want. It
will benefit financial institutions and perhaps younger workers, and could 
cause harm to our current plan.

Some Facts You Should Know about this Bill

· Federal annuitants with Medicare cannot obtain an MSA, but they will certainly
bear the burden of any adverse results of this legislation.

·  MSAs combine a high deductible catastrophic heath insurance policy with a 
tax-deferred savings account for health care purposes.

·  The enrollee pays the usual premium. The government share is divided between
payment to the insurance company and payment into the MSA. The premium amount 
paid by the government does not necessarily save taxpayers any money. 

· The Congressional Budget Office estimates that MSAs could result in $2 billion
in increased costs. To the extent these costs would increase new mandatory spending,
they would have to be offset by cuts in other retirement benefits. 

· If the worker does not spend the monies in the MSA, that amount stays in the 
account, accruing tax-deferred interest. New amounts are deposited every year into
the MSA.  Younger workers, who are healthier, would be the most likely to open 
MSAs leaving retirees, older workers, and the chronically ill in traditional health
plans. This "adverse selection" could result in an increase in premiums and/or a 
reduction in benefits. 

· Due to FEHBP Open Season rules, if a person covered under an MSA, becomes chron-
ically ill there is no provision to require that the accumulated funds in the MSA 
be spent down before switching to a plan with a lower deductible. In other words,
this individual could maintain an MSA for several years, accumulating tax-deferred
interest and resulting in a substantial savings account balance. During open season,
a switch could be made to a plan with a lower deductible, while retaining the money
in the MSA account.  [If the monies are withdrawn for other than medical purposes,
taxes must be paid.] 

· The Kassebaum-Kennedy bill called for a demonstration of MSAs ending in 2001. Yet,
inclusion in FEHBP is planned without any study of the possible effects or awaiting
the outcome of this demonstration. 

· MSAs were originally designed for employees of small companies. Local government
 entities that have tried them have found the increased cost a threat to their total
health care system.

Enrollment in MSAs has been under-whelming in the private sector. At recent hearings,
insurance companies, who sell these products, testified MSAs would be beneficial to
FEHBP. But these institutions, who have the most to gain from having a large 
consumer base like FEHBP, certainly would not say otherwise. 

· To date, hearings held on this subject have included testimony only from those who
favor MSAs. Divergent views were not solicited. 

· Your legislator may say that they want to give FEHBP employees another choice. A 
choice the involved parties do not want - all major employee unions and NARFE are
against MSAs, and the National AFL-CIO does not support them.
 
· This bill is really an economic message, not a plan to improve the FEHBP or to 
serve enrollees seeking better health care.  Conversely, the lure of accumulating a
large balance in the MSA account might cause some enrollees to delay obtaining routine
health care maintenance. 

· Remember that some legislators and staffers are very interested in these accounts
- it's an easy way to obtain a healthy savings account at taxpayer expense. The health
of the plan takes second place to these economic situations. 

· NARFE is adamantly against inclusion of MSAs in FEHBP.