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May 28, 2002
Cafeteria Plans for Gov't Workers Debated

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The idea of offering cafeteria-style benefit plans to federal employees led to a showdown last week between the congressman behind it and leaders of government-employee unions.

At a hearing held by the House Government Reform Subcommittee on Civil Service, Census and Agency Organization, Chairman Dan Weldon, R-Fla., touted the approach as a valuable recruitment and retention tool for agencies.

"We do not live in a one-size-fits-all world," Weldon said. "The federal government finds itself competing for talented workers with employers who offer cafeteria plans and other flexible programs."

Derrick Thomas, national vice president of the American Federation of Government Employees' 2nd District, testified that cafeteria plans would make health care unaffordable for a large number of federal employees because they "put responsibility for paying for benefits onto the employee instead of where they belong, on the employer."

GovExec.com reports that federal employees, government leaders, and lawmakers have expressed concerns about the rapid rise in health-care premiums under the Federal Employees Health Benefits Program. Premiums have jumped nearly 50 percent over the last four years, rising an average of 13.3 percent in 2002.

The government's current contribution to health insurance premiums is about 72 percent, according to GovExec.com.

In written testimony submitted to the committee, Colleen Kelley, president of the National Treasury Employees' Union, said introducing cafeteria plans into the federal government would have "the effect of limiting employee choice by shifting health inflation costs away from the government as the employer and onto its employees."

"Cafeteria benefits...are often used by employers as a method of controlling the costs of benefits they provide to their employees," Kelley testified. "This is accomplished by limiting increases in the annual pool of money employees are given to purchase these benefits."

According to Kelley, employers often use the increase in the Consumer Price Index as the benchmark for annual increases in the amount of money they give employees to buy benefits with.

"With simple inflation averaging 2 to 3 percent in recent years and annual health insurance premium increases averaging between 10 and 13 percent, it would not take long before employees would be required to forgo other benefits just to continue to maintain the health insurance coverage they choose," Kelley said.

Federal Circuit Court of Appeals Judge Dennis Jacobs testified in favor of cafeteria plans, which the court adopted in 2000.

"This successful program is a great benefit to everyone concerned regardless of their individual and specific needs," Jacobs said. "This program encourages our employees to plan for their health care needs and to be more careful consumers of health services. We have had not one complaint."

To read the GovExec.com article, click here.



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