Dismantling the Federal Employees Health Benefits Program
About This Event

Note: Walton Francis testified on the USPS' solvency problems on March 27th, 2012 for the Committee on Oversight and Government Reform. His testimony can be found here, or under "Event Materials" below. 

Post-Event Summary
In October, the Obama administration announced plans to take control of Federal Employees Health Benefits Program (FEHBP) prescription drug purchases; rather than allowing each participating health plan to negotiate independently with drug companies, the government would negotiate on behalf of all plans in the FEHBP using a single pharmacy benefit manager. This represents a significant change in operating procedure for this long-standing federal institution. Wednesday morning, James W. Morrison, former administrator of the FEHBP, and Walton Francis, primary author of CHECKBOOK’s “Guide to Health Plans for Federal Employees,” joined AEI’s Joseph Antos at AEI to discuss the various flaws of these two proposals. Morrison explained that health plans integrate pharmacy benefits with the medical benefits they provide; imposing one set of pharmacy benefits on all of the plans unwisely ignores the complex interaction between the benefit components of each plan. Francis added that the proposal would require the government to decide FEHBP’S formulary, subjecting the decision to politics. Antos contradicted the administration’s claims that the proposal would bestow greater purchasing power on the FEHBP’s single pharmacy benefit manager, adding that it would be impossible for politicians to determine a “fair” price for a given drug. The proposal sets in motion a dangerous direction for the Patient Protection and Affordable Care Act, giving the appearance of competition while allowing the government to enact top-down controls.

Event Description
The Federal Employees Health Benefits Program (FEHBP) was a successful health insurance exchange decades before the term was coined. It offers federal employees an informed choice among competing health plans and is the model for President Obama’s health care reform. Recently, the financially troubled US Postal Service proposed pulling out of FEHBP in the hope of saving money by running its own program. In addition, the administration wants the government to directly purchase all prescription drugs sold through FEHBP rather than allowing health plans to negotiate their own prices and compete on the exchange. Would these moves reduce the cost of providing health benefits to federal workers? Would enrollees continue to have plans that meet their health needs without limiting access to their prescriptions? Or are these the first steps in dismantling an effective market-based health insurance program? An expert panel will discuss the impact of these proposals to restructure FEHBP and what they imply for both the survival of the program and the broader health system under the president’s health care reform.
9:00 AM

9:15 AM
WALTON FRANCIS, Independent Author and Consultant
JAMES W. MORRISON JR., Morrison Associates               


11:00 AM
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AEI Participants


  • Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute (AEI), where his research focuses on the economics of health policy — including the Affordable Care Act, Medicare, the uninsured, and the overall reform of the health care system and its financing. He also studies the impact of health care expenditures on federal budget policy.

    Before joining AEI, Antos was assistant director for health and human resources at the Congressional Budget Office (CBO). He has also held senior positions in the US Department of Health and Human Services, the Office of Management and Budget, and the President’s Council of Economic Advisers. He recently completed a seven-year term as health adviser to CBO, and two terms as a commissioner of the Maryland Health Services Cost Review Commission. In 2013, he was also named adjunct associate professor of emergency medicine at George Washington University.

    Antos has a Ph.D. and an M.A. in economics from the University of Rochester and a B.A. in mathematics from Cornell University.

    Follow Joseph Antos on Twitter.

  • Phone: 202-862-5938
    Email: jantos@aei.org
  • Assistant Info

    Name: Neil McCray
    Phone: 2028625826
    Email: Neil.McCray@aei.org


Robert B.
  • Robert B. Helms has served as a member of the Medicaid Commission as well as assistant secretary for planning and evaluation and deputy assistant secretary for health policy at the U.S. Department of Health and Human Services (HHS). An economist by training, he has written and lectured extensively on health policy and health economics, including the history of Medicare, the tax treatment of health insurance, and compared international health systems. He currently participates in the Health Policy Consensus Group, an informal task force that is developing consumer-driven health reforms. He is the author or editor of several AEI books on health policy, including Medicare in the Twenty-First Century: Seeking Fair and Efficient Reform and Competitive Strategies in the Pharmaceutical Industry.
  • Phone: 2028625877
    Email: rhelms@aei.org
  • Assistant Info

    Name: Kelly Funderburk
    Phone: 202.862.5855
    Email: Kelly.Funderburk@AEI.org
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