Members of Congress on the ACA Exchange? … In Name Only

Many people do not know that Obamacare (PPACA) put members of Congress on the ACA Exchange and kicked them off the Federal Employee Health Benefits (FEHB) program.  The law (section 1312) requires that members of Congress and designated congressional staff must obtain coverage by health plans created under the law (i.e., coverage offered via the ACA Exchange). This assured many Americans that the newly created Exchange couldn’t be so bad with members of Congress on the ACA Exchange also?  When they signed Obamacare (PPACA) into law, our representatives and senators were leading by example and actually putting their money where their mouths were.   Given that the ACA Small Business Health Options Program (SHOP) marketplace is only open to employers with less than 50 employees, the member of Congress would have to buy their health insurance on the individual Exchange where the generous taxpayer health subsidies do not exist.

After digging a bit on the internet, I found out how members of Congress on the ACA Exchange (Section 1312) came into existence…it was a political maneuver to thwart the passage of Obamacare that backfired!   Let me explain.  Sen. Charles Grassley (Republican-IA), a member of the Senate Finance Committee, included this requirement in his version of the law thinking that the Democrats who controlled the committee would reject it.  Instead the Democrats embraced it and the Republicans were left to either explain why they didn’t really want to “walk the walk” with the affected Americans or simply stew in silence that their maneuver had backfired. Thus in 2010, the members of Congress on the ACA Exchange became part of law.

Congress on the ACA Exchange following the rules

Members of Congress on the ACA Exchange—How much is it costing them?

Looking at my table in an earlier blog post,  throwing the members of Congress and their staff onto the ACA Exchange would mean that they would lose some very lucrative taxpayer subsidies provided to federal workers who are eligible for FEHB.  I have to admit that I found it surprising that the members of Congress would pass a bill that put members of Congress on the ACA Exchange.  This action essentially would take thousands of dollars in taxpayer subsidies out of their pockets and such altruism is not a trait I would associate with this group.

The passage of Obamacare (PPACA) would have resulted in taxpayer subsidy losses from the 72-75% employer premium share in FEHB (worth about $5,000 for individuals and $10,000 for families) and the ESI exclusion (about $1650 for those making less than $30,000 and about $4500 for those with incomes over $100,000 in 2008).   Did you think that our senators and representatives would really give up their generous taxpayer subsidized health benefits under the FEHB program without exerting their influence to undo the full impact of the Obamacare (PPACA) law on their own pocketbooks?  The “we-are-not-giving-up-our subsidies” solution was to have the members of Congress and their staffs buy health insurance (gold plans only) on the D.C SHOP Marketplace rather than on the ACA Exchanges that exist for individuals. How could this happen when the ACA SHOP marketplace was only open to employers with less than 50 employees? Do the rules not apply to influential members of Congress?

The ACA’s SHOP marketplace was devised for small businesses (with less than 50 employees) that have had trouble providing employees with affordable health insurance coverage because of their small risk pool sizes.   Eligibility rules for SHOP participation are well defined.  The  average employer group size in the SHOP marketplace is less than 10 (if you don’t count members of Congress on the ACA Exchange, of course).

So how were the members of Congress allowed to buy on the SHOP marketplace when their employer group size is over 10,000?  Influence!  The not-so-altruistic members of Congress worked with the Office of Personnel Management (which administers benefits for federal workers) to devise ways to guarantee that they kept their lucrative taxpayer health subsidies even though Obamacare (PPACA) had taken them away Members of Congress REALLY do not have to play by the same rules as other Americans.

The figure below summarizes how members of Congress ended up with health insurance benefit far above those legislated under Obamacare (PPACA) for all other Americans who must buy their health insurance in the non-group marketplace and are not eligible for SHOP coverage.

Congress on the ACA Exchange in name onlyUnlike members of Congress, many Americans have employers that are not so generous and they end up having to buy their health insurance on the individual ACA marketplace where the less-than-generous taxpayer subsidies require the individual have a household income that is less than 400% FPL .  Unfortunately, like all things coming out of Washington, the reality of putting members of Congress on the ACA Exchange and their subsequent “financial sacrifice” is as far from reality as one can get.

In addition to the “extras” shown above, members of Congress and their staffs also get other financially beneficial perks not available to others:

  1. They continue to earn time toward retirement health benefits under the FEHB program (i.e., continuous enrollment in a health plan offered under FEHB (or through the D.C. SHOP) for the five years of service immediately prior to retirement).   The D.C SHOP is simply treated as an extension of the FEHB program.
  2. Members of Congress are also authorized to receive free outpatient care at military treatment facilities in the D. C. area (saving on copays and coinsurance others must pay).

For a more detailed look at all taxpayer health subsidies member of Congress enjoy, I would suggest looking at “Health Benefits for Members of Congress and Designated Congressional Staff in Brief”  by the Congressional Research Service.

Summary–Members of Congress on the ACA Exchange

Anyone who thought that members of Congress were going to let an enacted law (Obamacare (PPACA)) rob them of thousands of dollars of taxpayer health subsidies, they would have greatly misjudged our rapacious elected officials.  Members of Congress and their staffers were allowed to bypass rules governing the SHOP marketplace (e.g., it is limited to employers with less than 50 employees) so that could continue to receive all the benefits in the FEHB program that they lost under Obamacare.

By placing the members of Congress and their staffers on the DC Health Link SHOP (for employers with less than 50 employees), our government let members of Congress and their staffers  keep the taxpayer subsidized health benefits they had before Obamacare (PPACA) took them away.  These taxpayer subsidies include the 72-75% government contribution of health insurance premium and  the ESI exclusion that allows for pre-tax payment of employees’ premium payment.  In addition, because the government treats the DC Health Link SHOP plans for members of Congress and their staffers as simple extensions of the FEHB program, time in these insurance plans counts toward eligibility for FEHB retiree benefits (something most other Americans do not get).  Members of Congress are on the ACA Exchange in name only.

So much for “putting their money where their mouths are”…

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