Remarks of OPM Director John Berry

FEHB Carrier Conference

L'Enfant Plaza Hotel

March 24, 2011

Hello! Thank you, John, for the kind introduction. It is a great honor to work for President Obama, but the greatest honor I have every day is to lead the people of OPM. John is a brilliant health care policy guru and a great friend going back to our days at the Syracuse Maxwell School. His other half, Jon Foley, is doing great work as our head of Planning and Policy Analysis.

And they've gotten great help from Dr. Sunny Ramchandani, our White House Fellow this year. Sunny is also a Lieutenant Commander in the Navy and was the Integrated Chief of General Internal Medicine at Walter Reed.

I'd also like to thank Candy Schaller and America's Health Insurance Plans, our partner in hosting this conference for 15 years now; and our partners at the Department of Health and Human Services, represented today by Joel Ario, Director of Health Insurance Exchanges and Peter Lee, Director of Delivery System Reform. I knew when I accepted this job that FEHB, as great as it is, could be better. I didn't know we'd have a role in implementing what would become the Affordable Care Act. But the Jo(h)ns have taken it all in stride.

This week is the first anniversary of the Affordable Care Act. In just one year, it has already given Americans more freedom and control over their health care choices. Millions of Americans are already enjoying lower costs, better quality coverage, and new coverage options under the Affordable Care Act. It's also giving states the flexibility and resources to innovatively implement the law in the ways that work best for them. I'll have an announcement about an OPM-specific accomplishment under the Act later in these remarks.

OPM was proud to work with our partners at HHS, the Department of Agriculture's National Finance Center, and our carrier, GEHA, to launch the federally operated portion of the Pre-existing Condition Insurance Program, one of the first accomplishments under the Affordable Care Act. This program is already saving and improving lives. People like Jerry Garner, a real estate agent who lost his coverage and couldn't get new insurance because he had a kidney transplant. After months of having to choose between life-saving medicines and paying the mortgage on his family's home, he got coverage under PCIP. His story was told in the New York Times last week.

We were proud to start up PCIP so quickly, and we've already begun work for our role in the state exchanges. So stay tuned, there's much more to come. But today, we're here to talk about a new era for the Federal Employee Health Benefits Program. The phrase "new era" is not used lightly. FEHB came on the scene as an innovator over 50 years ago, and it has continued to provide strong benefits and plan options, with unparalleled geographic reach. And I am committed to positioning FEHB to continue its leadership role in the marketplace for the next 50 years.

Starting with the 2010 call letter, we made important improvements.

Now, you've implemented last year's changes, we've passed the Affordable Care Act, and this year's call letter cements our new path. Our goal is simple, and it is challenging: FEHB will be the innovation leader in employer-based health care. We will leverage our unique partnership with you and the power of scale to inaugurate a new era for the FEHB; an era when wellness and prevention help us avoid getting sick; when science drives better patient outcomes and bends the costs curve toward significant savings; when eight-million-plus Americans lead better, healthier lives.

The FEHB Innovation Era has begun.

It began with our many joint accomplishments of the last year, and it will only accelerate in the year to come.

We made two big investments in wellness and prevention: you stepped up to provide preventive care without a co-pay. And we offered FEHB enrollees up to two tobacco cessation attempts, with all FDA-approved medications and up to eight counseling sessions per year, also without a co-pay. I encourage you to please promote this benefit. The latest peer-reviewed science is clear: comprehensive tobacco cessation programs can reduce hospitalizations for heart attacks and coronary heart disease nearly 50%.

Anecdotally, I see it working. People know I'm watching my health, and a bunch of employees have come up to me in the halls or at the salad bar. They say "I lost eight pounds," and tell me how the exercise program or the personal counseling have helped, or how they're trying to stop smoking by using the benefit.

We also expanded our coverage pool to an important, under-insured population, and that brings me to our first announcement.

Thanks to the Affordable Care Act and the quick work of our insurers, I am pleased to announce today that over a quarter million – approximately 280,000 – more young adults, ages 22-26, will remain on their parents' FEHB plan this year. This means fewer young adults are at risk of putting off care or suffering financially due to an accident or injury. It means peace of mind for their parents as well.

Another part of the Innovation Era is taking place on our campus near the White House. OPM, GSA, and the Interior Department started an innovative wellness pilot last year that complements FEHB. WellnessWorks features free, confidential biometric screenings, health risk assessments, individualized coaching and health education, a weekly farmers' market, and an exercise program to keep up the momentum.

In our government-wide responsibility for wellness and work-life, we have worked with all major federal agencies to increase the scope, intensity and quality of worksite wellness programs. So you don't have to carry the wellness flag alone; we're helping.

Much of the benefit - both to our beneficiaries' health and everyone's bottom line - will not be realized immediately. But over the course of millions of lives, it will be incalculable.

FEHB operates on a simple principle: that competition drives better performance and lower prices. To maintain a robust market and honor that principle, we need a greater understanding of plan performance and the factors driving cost. And that's exactly what the Health Claims Data Warehouse will give us.

I've always said the scale of government provides unique opportunities to do good, and that is very true here. With the power of eight million covered lives in every corner of our country, of every age and every health status, we can be at the forefront of learning.

And let me be clear that patient privacy is foremost in our minds and it will be vigorously protected.

In an innovation borne of collaboration, we've worked with many of you over the past few months to develop consensus on performance metrics to get at these very questions. Because of your willingness to share ideas, we've led a critical effort to streamline the ways we measure our collective success. When complete, these metrics will help all of us maximize health plan performance.

So we appreciate your help, and that brings me to my second announcement: this project will be operational this year.

Our next area of innovation and savings for the coming year is prescription drugs. President Obama put increasing FEHB's flexibility to secure lower pharmaceutical cost in his 2012 budget, and we're going to work to make that happen.

And because every efficiency counts, I have one more announcement to make: we expect to save roughly $5 million in premiums by dropping the brochure mailing requirement. The full brochures will be accessible online, and they will still be mailed upon request. But this will save money and a lot of trees.

Please let us know if you have suggestions for any more requirements like this can be dropped for a savings.

Our third area of innovation for this year is bringing more people into the program, including some who may be costing society more by being uninsured. The 22 to 26-year-olds are only the beginning. The Affordable Care Act gives us the requirement, and I'd say the opportunity to cover tribal employees. We're about to start a process to consult with tribes on how to accomplish this in the best, quickest way possible.

We're also expanding through affinity benefits. Some HMOs are already offering coverage for domestic partners and others as a non-FEHB benefit. Thank you. I strongly encourage all of you to offer this type of affinity benefit for 2012.

President Obama and I look forward to working with Congress to change the law so that all carriers will cover domestic partners within FEHB. We came close in the last Congress, and we're not giving up, because no American family should be denied health insurance. It's not right, and it's not good business.

As an employer competing for the best talent, we need a benefits package comparable with the Fortune 500 employers we're competing against, and that means providing benefits to domestic partners.

Let me close by looking at the longer term, because the ability to look farther out, way beyond the current quarter, or even the fiscal year, is one of the chief benefits of our unique private-public partnership.

"Private" is first deliberately. For its entire history, FEHB has relied on individuals choosing among independent private carriers to drive the system to provide better value.

In exchange for the service you provide, OPM has established rules to ensure fair, far-sighted competition, and guard against fly-by-night plans that may offer low prices but no value. This protects and supports carriers which compete honestly on value and invest for the future.

And while OPM's job is to push for the greatest value for the taxpayers and our beneficiaries, it's not a one way street. We're interested in hearing from you about how we can better operate and manage the FEHB marketplace.

For instance, a number of our community-rated plans have raised questions about our current methodology for setting rates. My staff and I are undertaking a thorough review of the methodology.

We're building off provisions in the Affordable Care Act defining medical loss ratios and we look forward to working with you on this effort.

Our next target for future innovation is making the program more affordable for our lower wage workers. Again, we want your ideas. Last year at this conference, I expressed the concern that growing premiums may already be pushing away some lower wage workers, and that concern remains. It is not enough to address long-term costs to gradually solve the problem.

We value every employee, from GS-1 all the way up to the President of the United States. Our people are our greatest asset. We're committed to offering coverage they can afford.

Innovation doesn't happen overnight. It requires investment in creative minds. And that's why we're investing in our Healthcare and Insurance units, and our Planning and Policy Analysis unit. That's why we're making our super team of actuaries, analysts, and contract managers even stronger.

Let me be clear: we're going for the best and the brightest here. We are swinging for the fences. Nothing is more important than our responsibility to care for our workers, retirees, and their families. These two units, already very strong, should be the best in the world, bar none. That's my goal.

Because the better we are, the better you will be. I believe firmly that an investment in excellence will pay for itself. It's worth noting that inflation in our program costs is already below national trends - but we can do even better. The Obama Administration is committed to leaner, smarter government, and our FEHB reforms are part of that commitment.

You're all familiar with the "big three" goals articulated by our friends at HHS: better care, more affordable care, and better health. As you can see, we're partnering with you to innovate on all three. And we're all going to be held accountable for results. The taxpayers demand it, our beneficiaries demand it, and economic reality demands it.

We have inaugurated a new era, but there's a lot more work ahead to fully realize the vision we've laid out. Other next steps are in this year's Call Letter, which you'll hear more about later today. We're asking you to continue encouraging people to adopt healthy lifestyles, by providing concrete incentives to participate in wellness and prevention activities. Your efforts through FEHB and ours at the workplace should combine to provide a powerful message to Federal employees.

The letter also gives support to integrated healthcare systems, reducing obesity, addressing racial and ethnic disparities in health status and care – the Call Letter is a concrete, multi-pronged approach to moving toward the future we know is possible.

As you know, we're already hard at work with the Department of Health and Human Services and your industry to set up the infrastructure that will bring multi-state plans to the state insurance exchanges.

While that work is still in its early stages, and while the programs are strictly separate under the law, we expect progress in FEHB to inform our work on the multi-state plans.

One of the reasons we are so happy to have Joel Ario and Peter Lee at our conference is so they can speak to you about the state exchange development and delivery system reform initiatives they're leading, and we can work together to put them into practice.

Barack Obama ran for President on a promise to rethink, improve and expand health care in America. His administration has hit the ground running on implementation of the Affordable Care Act. FEHB, and therefore all of us, are at the forefront of the brighter, healthier future the Affordable Care Act promises.

So let's make this another great year.

Thank you, God bless you, and God bless the United States.