GEHA's Position on Health Care Reform
Updated on January 21, 2010

Here are GEHA President Richard Miles' latest thoughts on the national health care debate:

The recent election of a Republican senator from Massachusetts has dramatically changed the outlook for passage of a health care reform bill. This is primarily because the Democrats have lost the super-majority that they held in the Senate, which had enabled them to pass their health care reform bill on Christmas Eve. The Senate now consists of 58 Democrats, 41 Republicans and 1 Independent, and the Democrats no longer have the ability to override a filibuster effort by the Republicans. To further complicate matters, House Speaker Nancy Pelosi has publicly stated that she doesn't have the votes in the House to adopt the Senate bill as it is currently drafted.

President Obama and others have said that they aren't giving up on health care reform, but they may have to pare back the scope and cost of the legislation and develop a bipartisan package. How all of this will end up is anyone's guess, but it appears that the President will not be signing a bill as soon as was hoped.

Two issues that we've been monitoring closely are the industry assessment and the excise tax that are contained in the Senate bill (but not the House bill). A majority of House members and the labor unions opposed the excise tax on the grounds that it would quickly have a negative impact on middle-income Americans. It was reported that a deal had been struck with the unions to exempt for five years plans that had been collectively bargained, a provision that would not have helped FEHB plans. Additionally, the threshold amounts triggering the tax were raised slightly, and dental and vision benefits were excluded, two developments that would have mitigated the impact of the tax on FEHB plans slightly. It is impossible to know at this point whether the excise tax, with or without modification, will be contained in a health care reform package that might ultimately reach the president's desk. Here at GEHA, we support health care reform efforts in general, but we have a few concerns:

• We would be concerned about any legislation that disbands FEHB in favor of state-based exchanges. The FEHB program has been held up as a model for reform. It provides coverage by the use of a regulated marketplace in which private companies compete for members on both price and service. It also allows participants a great deal of choice.
• We would be opposed to taxes levied on health plans like GEHA or a tax on its members to help pay for health care reform. Taxes on health insurance plans would merely increase the cost of providing coverage, making it less affordable. We believe that GEHA is part of the solution and not part of the problem.

Covering the uninsured. There are currently 47 million Americans without health insurance. We need to develop a "safety net" of coverage for those people. This will most certainly involve some kind of subsidy to those who can't afford coverage. GEHA supports legislation to create a way for the uninsured to obtain coverage. Currently, the cost of providing care to the uninsured is cost-shifted by the hospitals and doctors to other payers, thereby creating a hidden social tax on other health insurers and their policy holders.

Mandated health insurance. Closely coupled with the problem of the uninsured is the issue of whether a person would be required to purchase health insurance and whether employers would be required to provide health insurance to their employees. We would support an individual mandate along with subsidies for low-income persons needing assistance. We would also support a mandate on large employers but believe that small employers should be exempted.

Health insurance underwriting. Health insurers currently can charge varying premiums based on the health status of the individuals being insured. This makes the cost of individual policies prohibitive for people with serious health issues. This also can make small group policies unaffordable if one or more individuals in the group have serious health problems. GEHA competes in FEHB program, where this practice of underwriting is not allowed. We believe that a system that allows carriers to community rate policies (but not individual underwriting) is fair if it is coupled with an individual and employer mandate for coverage.

Funding. Some estimates have pegged the direct cost of providing insurance to the uninsured at $1.3 trillion to $1.5 trillion dollars over the next 10 years. There are numerous proposals about how to generate this funding, and virtually all of them face strong opposition. Health insurance premiums currently can be paid with pre-tax dollars, and there is some discussion about eliminating this tax break to fund health care for the uninsured. We believe that making health insurance more expensive for companies and their employees would be a mistake, but we don't have an alternative funding mechanism to offer. An alternative proposal calls for taxing benefits that are offered beyond the basic Standard plan offered by BCBS in the federal program.

Comparative effectiveness. GEHA strongly supports the creation of a national board of experts to compare and evaluate the effectiveness of treatment options. We see wide variations in clinical approaches with varying costs. It would be helpful to have a national board evaluate clinical options and give guidance on best practices. We believe that health plans should have the right to design benefits around best practices as defined by independent experts.

Biosimilars/Biogenerics. Biosimilars (also known as biogenerics) are generic versions of specialty drugs, which are used to treat complex conditions such as cancer and multiple sclerosis. Biosimilars constitute the fastest-growing segment of the pharmaceutical market. The drug pipeline is filled with biosimilars. However, there is no regulatory pathway for biosimilars to be approved in the United States. We strongly believe that the regulatory pathway for approving biosimilar drugs established in one of the bills currently being considered (H.R. 1427) would greatly encourage innovation and increase competition. GEHA supports legislation that makes biosimilars available within five to seven years rather than giving drug companies 12 years of exclusivity.

Click here for more information on biogenerics.