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Avert Your Eyes From the Shiny Object

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Whenever there is a big fight in Washington, opponents of reform attempt to waive around some type of shiny object to distract from the real goal of reform.   The shiny object du jour in the Obamacare funding fight is repeal of the Obamacare special exemption for Congressional staff.

If you haven't been following the Obamacare debate, a few weeks ago, the Office of Personnel Management issued guidance which stated, “Members of Congress and their congressional staff who are no longer eligible for enrollment in an FEHB plan will continue to receive a Government contribution toward the cost of their premiums for health plans purchased on the Exchange.”  OPM issued this guidance because Obamacare placed most Congressional staff into the exchanges created under the Act.  

Further the guidance stated, “In addition, the generally applicable federal income and employment tax rules related to employer-provided health care coverage apply to the arrangement described in this Q&A. As a result, participation in the arrangement will not result in any income or wages to the participating employee.”

There has been much justified outrage about this because of the special ability of Congress to support it's employees participation in the exchanges, a practice that Obamacare explicitly prohibits for every other employer.  OPM using some legal gymnastics states as much saying, “the arrangement described is not subject to the rule in the Affordable Care Act that prohibits an employer from providing a qualified health plan through an Exchange as a benefit under its cafeteria plan.”

Many members of Congress are rightfully outraged by this and they've offered solutions that propose to equalize treatment between the President, Vice President, Members of Congress, Congressional Staff, and political appointees and the private sector. 

Congressman DeSantis and Senator Vi:tter introduced legislation to this effect.  The language is fairly straightforward stating

`and congressional staff with' and inserting `, congressional staff, the President, the Vice President, and political appointees with'
and
`(iii) GOVERNMENT CONTRIBUTION- No Government contribution under section 8906 of title 5, United States Code, shall be provided on behalf of an individual who is a Member of Congress, a congressional staff member, the President, the Vice President, or a political appointee for coverage under this paragraph.
`(iv) LIMITATION ON AMOUNT OF TAX CREDIT OR COST-SHARING- An individual enrolling in health insurance coverage pursuant to this paragraph shall not be eligible to receive a tax credit under section 36B of the Internal Revenue Code of 1986 or reduced cost sharing under section 1402 of this Act in an amount that exceeds the total amount for which a similarly situated individual (who is not so enrolled) would be entitled to receive under such sections.

Advocates for this proposal are citing what they see as positive polling data in an effort to make the DeSantis/Vitter language the “ask” for the House's response to the bill the Senate just passed.  

There are a number of reasons that making DeSantis/Vitter the “ask” are unwise.  

1) Eliminating the Congressional Exemption does nothing to address the widespread problems in the private sector associated with Obamacare.  It will do nothing to address premium cost increases, it will not get spouses back on UPS's coverage and it will not allow a small business to hire a 50th employee.  Many have written on the problems with Obamacare, so I won't rehash that here, but suffice it to say that sticking it to roughly 20,000 D.C. staffers does nothing to help the 330 million Americans impacted by this law.

Part of this strategy though assumes that after the House gives in and sends this back to the Senate that the House will hold the line on the debt-limit fight in a few weeks.   If you're convinced that the House will stand strong under attacks that they're going to “undermine the full faith and credit of the United States for the first time in the history of the Republic” when they didn't stand strong when threat of a government slowdown was looming, I have some great swampland I'd like to talk to you about.  

2) Some of the advocates of the bill feel that Congress and the President should feel the pain that the private sector is experiencing because of Obamacare.  Fair enough, but DeSantis/Vitter will not do that.

First, as OPM points out, the employer here has a pretty deep well to dip into to pay premiums. For family plans the government will pay roughly $10,000 each year.  Your average small business likely doesn't have ten grand sitting around for their employees' insurance.

As for Senators, Congressmen and the President, the idea that they're suddenly going to experiencing Obamacare in it's full glory, just doesn't match up with reality.   The President has a physician who is an  officer in the United States military and a member of the White House Military Office.  The idea that DeSantis/Vitter is going to force the President to have to flip through a provider directory to see if Captain Ronny Jackson is still in-network before he gets his next physical strains credulity. 

There's a similar situation for Members of Congress.  Members don't advertise that the House and the Senate have their own Attending Physicians Office.  ABC has a nice article here that outlines the on-site top flight medical care that Members of Congress and on occasion their staffs get for just a few hundred dollars a year.   The quality of care is excellent and the practitioners are exceptional – having had an EKG in the Health Suite in the Hart Senate Office Building when my Afib started acting a bit funky I can personally attest to the quality of care.

How many businesses do you know that have multiple full time physicians and nurses on-site? 

The DeSantis/Vitter will do nothing to abolish this office. 

Further, Members and Senators have essentially top-flight concierge care at the Walter Reed National Military Medical Center. When a Member or Senator needs care – or even just their routine annual physical – their scheduler merely picks up the phone and calls Walter Reed and schedules an appointment for the Member.  They again get top flight care from excellent physicians and nurses, but they have access and convenience that exceeds that of the average taxpayer (or average soldier for that matter). 

DeSantis/Vitter doesn't eliminate this perk.  I can assure you that even if it passes, Members won't be wading through the morass that is scheduling a doctor's appointment or visiting an emergency room any time soon. 

3) Finally, DeSantis/Vitter could result in an up to $80,000 retirement windfall for some staff.   Some offices have said publicly (and I suspect more would do it quietly) that if the bill goes through they're going to increase their staffs' salaries to "make them whole." Under DeSantis/Vitter, this money would have to come as wages, as opposed to tax-free employer provided premium assistance. (see above) For staff with either a spouse or kids the Blue Cross Blue Shield PPO right now costs the gov't $920 a month. A Legislative Assistant who was making $75,000 per year with wife and kids now has to be paid $86,040 per year (actually probably more because now that this money is wages he's going to get hit by FICA, Fed & State taxes)  but let say $87,000 to keep the math simple.

These staffers are all enrolled in the Federal Employee Retirement System (FERS).   As I mention above, his salary – which is what's used to calculate his "high 3" – is up by $12,000.  (His “high 3” is the average that is used to calculate his annual annuity in retirement.)  Assuming that he puts in 20 years before he retires at 60,  that means that FERS calculates his annuity at $12,000 higher than it would have otherwise.  Retiring with 20 years of service he gets 34% of his salary for the rest of his life.  That's an additional roughly $4000 per year - and assuming he's of average health and dies in 20 years, Uncle Sam has just kicked in an additional $80,000 to his retirement. That doesn't include COLAs.  It also doesn't take into account the benefits that will accrue to his TSP, including mandatory agency match that all federal employees receive.

While DeSantis/Vitter attempts to address a real problem, it's a terrible choice as a counter proposal from the House.   It's doesn't solve the problem it proposes to address, provides windfalls to staff, and most importantly doesn't fix any of the problems with Obamacare in the wider economy.  

Republicans in the House of Representatives rightfully earned broad praise when the passed a bill that defunded Obamacare.  The American people were on their side, and if they stand strong on this position, the American people will continue to support them.