OPM-managed healthcare plans may not reduce premiums, CBO finds

A feature of Senate Democrats' healthcare bill that would allow the federal government to negotiate national insurance plans with private providers may not produce the savings its proponents anticipate.

That plan -- the costs of which will depend wholly on future years' budgets -- is unlikely to "substantially change" most Americans' monthly premium costs over the long term, the Congressional Budget Office revealed last week.

Democrats decided to write the new mandate for the Office of Personnel Management into their healthcare bill after talks over the public option collapsed.

Their substitute plan would require OPM to solicit bids for multi-state insurance packages, in the hope that the bidding process would prove competitive enough to lower healthcare costs across the country.

Initially, key centrist and liberal party members believed that a national healthcare market managed in part by the same agency that oversees federal employees' benefits could be successful at securing the best plans for the lowest prices. The Federal Employees Health Benefits Program (FEHBP) has long been the standard bearer in the healthcare debate, as lawmakers have constantly emphasized voters should be eligible for the same care as their elected officials.

However, the CBO discovered last week that OPM's new mandate is unlikely to have its desired effect on Americans' healthcare costs. According to their initial estimate, the national plans might not posses enough power to encourage other insurance providers on the proposed national insurance exchange to lower their monthly rates.

Interestingly enough, the CBO predicted a similar fate for the Senate's public plan proposal, which would have allowed states to "opt out" of the system. That condition would have made the pool smaller, diminishing its power to act as a competitive force in the insurance marketplace, analysts found.

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