A Senate health care reform proposal would put the Office of Personnel Management in charge of extending medical coverage to uninsured Americans. But some experts warn the plan may overwhelm the tiny agency and risk undermining federal pay and benefits programs that OPM is responsible for overseeing.

"In my opinion, OPM is good at what it does. It can't go beyond that," said former OPM Director Linda Springer. "You can't try to have OPM be an insurance company."

Springer, who stepped down from OPM last year, fears Congress won't give OPM the budget and staffing increases needed to handle this burden, and said the agency is not set up to oversee health insurance for anyone other than federal employees. For example, she said, OPM now isn't equipped to collect premium payments. Under the federal health program that OPM manages, agencies automatically deduct premium payments from employees' paychecks.

Springer and other critics add that the Senate proposal could distract OPM from its day-to-day job of managing pay and benefits programs and trying to improve the federal hiring and civil service systems.

Making OPM responsible for setting up and managing an insurance program for tens of millions of uninsured Americans would be a mammoth undertaking for an agency of 5,800 people — and only 184 of those manage the health insurance program for federal employees, retirees and dependents.

Under the Federal Employees Health Benefits Program (FEHBP), more than 8 million federal employees, retirees and dependents choose from among nearly 300 health insurance plans. OPM negotiates with national and regional insurance plans such as Blue Cross Blue Shield and Aetna to set premium rates each year.

At press time, details on the Senate proposal were scant. The plan would call for OPM to administer a new insurance exchange — expected to be similar to, but separate from, FEHBP.

And though most experts say OPM does a reasonably good job administering FEHBP and keeping premiums in check, some said recent high-profile mistakes show the agency is far from perfect. For example, OPM surprised many in May when it announced that some long-term care insurance plans, previously advertised as having never-increasing premium rates, would see a 25 percent increase next year.

And some critics fear that if OPM is tasked with handling health care reform, that will lead to problems with the existing FEHBP in the form of higher premiums and less generous benefits.

OPM declined to comment on the proposal. President Barack Obama said Dec. 9 he supports the Senate Democrats' new idea, calling it a "creative new framework."

Opposition

Two large employee groups — the National Active and Retired Federal Employees Association (NARFE) and the Federal Law Enforcement Officers Association (FLEOA) — have come out against the Senate health plan.

NARFE President Margaret Baptiste said that requiring "FEHBP plans to offer coverage in the public option … may encourage some insurance carriers not to participate in either program. As a result, competition and choice, which are hallmarks of the FEHBP, would be undermined."

NARFE is also worried this expansion could distract OPM from its core mission.

"Most organizations are successful when they focus on their core mission like a laser beam," Baptiste said. "OPM should be in the business of attracting the best and brightest to federal service. OPM's role … is too important to dilute with the massive undertaking of creating and administering a new health care system for millions of Americans."

Former senior OPM executive Henry Romero agrees.

"It would significantly alter OPM's function and role," Romero said. "Instead of being viewed as the focal point for human capital and personnel functions for the federal government, that mission would be dwarfed by the huge responsibility of running a new health benefit program with expanded coverage and quite a large constituency. I'm not sure that's appropriate for OPM."

FLEOA National President Jon Adler said the proposal could lead to radically higher premiums for federal employees and even to the demise of FEHBP.

"This proposal fails to consider … growth of such a program and, as such, does not see the real possibility of FEHBP being subsumed by the newly crafted, OPM-run civil health care program," Adler said. "We cannot afford the kind of premiums under such a plan."

Logistical concerns

But some experts say the Senate proposal could work if properly executed.

Walt Francis, a consultant who writes the annual Checkbook health care guide for federal employees, said OPM could partner with states to administer the program. He said states might be put in charge of enrolling their citizens in OPM's program, collecting premiums and deciding how to handle those who are behind on their premium payments.

Former acting OPM Director Michael Hager said he thinks OPM can handle the proposed new program, but only if it gets plenty more resources.

"It's the logical place to do it. But OPM is going to need some intense operational support to launch it," he said.

The agency would have to add thousands of new employees — and maybe even double in size — to handle such a huge new mission.

Hager, who also used to be chief human capital officer at the Veterans Affairs Department, said VA has about 5,000 employees who administer benefits to more than 23 million veterans, and said OPM would need to either hire a similar number of new employees to handle its new health care mission or add large numbers of contractors.

OPM would also need to beef up its fraud investigation capabilities and hire several hundred more investigators — some of whom would go to OPM's Office of the Inspector General, Hager said. Currently there are fewer than 100 people at OPM who pursue FEHBP fraud cases, he said.

OPM also will need to upgrade its computer systems to handle millions more customers, track their eligibility and benefits, and help staffers catch potential fraud, Hager said.

David Ermer, general counsel for the Association of Federal Health Organizations, a partnership of unions and health care plans serving federal employees, thinks it would only require a few hundred more employees. Ermer said his group has not taken a position on the proposal, but he thinks OPM could handle it.

OPM will need more actuaries to analyze health care insurance plans and premiums and negotiate to put those plans in the insurance exchange, said Colleen Murphy, president of Asparity Decision Solutions, which operates a Web site called PlanSmartChoice that allows federal employees to compare health insurance options. But hiring more actuaries might be tough, she said — there is a national shortage of actuaries today, and OPM might have to contract those functions out if it can't hire enough.

The proposal could broaden the reach of some health plans that now serve only federal employees. Richard Miles, president of Government Employees Health Association Inc. (GEHA), one of the larger plans in the federal program, said in a statement that his plan "would be excited about expanding our business." But Miles said there are still too few details to say what role GEHA might play and how it would affect its current members.

Blue Cross Blue Shield declined to comment until more details were known.

Next steps

At press time, Senate Majority Leader Harry Reid, D-Nev., was waiting for a Congressional Budget Office cost estimate before releasing details of the plan. If CBO decides the plan would cost too much, lawmakers could revise it, possibly by opening up the FEHBP program to all uninsured Americans. The Senate bill is expected to expand health care coverage to about 31 million of the roughly 47 million Americans who are now uninsured, although it is unknown how many of those would fall under the proposed OPM program and how many would be covered by other means such as a Medicare eligibility expansion.

Rep. Stephen Lynch, D-Mass., said he is studying whether the proposal would overwhelm OPM.

"I'm puzzled as to why a department such as [Health and Human Services] or [the Centers for Medicare and Medicaid Services] that has the capability, that has the experience, that has the personnel to handle such an issue has been passed over for something such as this," said Lynch, chairman of the House Oversight and Government Reform subcommittee that oversees OPM and the federal workforce.