Hidden health costs in Clinton's plan seen giving federal workers triple hit

Federal workers

February 24, 1993|By Carol Emert | Carol Emert,States News Service

WASHINGTON -- President Clinton's proposed federal wage freeze has prompted vehement objections from government employees. But several lesser known proposals could take even bigger bites out of the pockets of civil servants.

Government workers enrolled in the Federal Employee Health Benefits Plan could pay significantly higher premiums if Mr. Clinton's budget proposals become law, according to Diane Witiak of the American Federation of Government Employees, the largest federal labor union.

The cost of the health plan is divided between the government and employees, based on a formula derived from the premiums of the plan's largest providers. By law, the government cannot pay more than 75 percent of costs and, in recent years, it has typically paid about 66 percent, Ms. Witiak says.

When insurance giant Aetna dropped out of the plan last year, premiums should have shot up, but the government agreed to continue using the same formula with a "phantom Aetna" to keep down the cost to employees.

The Clinton administration, in one of many efforts to cut the deficit by reducing government spending, has proposed eliminating the "phantom Aetna" formula, Ms. Witiak says.

Although the details are vague, the Clinton plan apparently would "lower government's contribution and shift $680 million" in costs to employees, she says. "It could be worse than the pay freeze," Ms. Witiak says.

Taking into account the wage freeze and the higher taxes that all Americans will pay, if you're a federal employee, "you're not taking a double hit, you're taking a triple hit," Ms. Witiak says.

Frustrated by the lack of detail in Mr. Clinton's budget plan, she waxes nostalgic over the days of the Bush administration, when "they gave you four books to look through" immediately after the State of the Union address.

Mr. Clinton's finished plan is not scheduled to be made public until next month.

The sentiments of federal unions toward Mr. Clinton have taken a 180-degree turn since his budget address last Wednesday. After years of being the Republican Party's scapegoat for the country's ills, AFGE and other unions rallied around Mr. Clinton during the 1992 election in the belief that the Democratic Party would act in the interest of labor, as it has historically.

But the president's call for sacrifice -- and more and more sacrifice, if you're a government worker, the unions feel -- has sent the unions into frenzies of lobbying and letter-writing. A bitter op-ed page article by AFGE president John Sturdivant which appeared in USA Today yesterday accused the president of conducting "business as usual" by picking on civil servants.

In addition, federal unions, other advocacy groups and members of Congress, who represent government workers, are holding long strategy sessions and developing alternative plans. AFGE has sent out a special edition of its biweekly bulletin to alert union officials across the country to the threats to their pocketbooks in the Clinton plan.

Before Mr. Clinton's speech, "we were very hopeful that federal employees . . . would be treated just like other American citizens," Ms. Witiak says. But although the president's plan "shows some sensitivity to lower-income Americans, there was not that same concern for federal workers," 46 percent of whom earn $30,000 or less, she says.

In addition to the proposed 1994 wage freeze, Mr. Clinton and his budget-meisters want to postpone locality pay raises, which would compensate workers living in more expensive areas of the country, from 1994 to 1995.

In 1995, the plan would take effect "under a revised system," says Ms. Witiak, "and that to us also has frightening implications."

Between 1995 and 1997, when federal pay would be allowed to increase again, the Clinton administration wants to lower the rate of increase to 1.5 points below the employment cost index, rather than the current 0.5 points, Ms. Witiak says.

The index measures the cost of labor as it increases each year in the private sector. Public sector wages are usually calculated on that index minus 0.5 points, but under Mr. Clinton's plan, wages would increase minus 1.5 points.

Also under the Clinton plan, federal workers would not be allowed to deduct a lump sum from their annuities when they retire. The lump sum option was suspended under the 1990 budget act and was to be reinstated in 1995.

But "we didn't really hold out any hope that in five years they'd say, 'OK, let's give it back to them,' " Ms. Witiak says.

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