[Senate Report 118-220]
[From the U.S. Government Publishing Office]
Calendar No. 499
118th Congress} { Report
SENATE
2d Session } { 118-220
======================================================================
FEHB PROTECTION ACT
__________
R E P O R T
OF THE
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
TO ACCOMPANY
S. 4035
TO REQUIRE THE DIRECTOR OF THE OFFICE OF
PERSONNEL MANAGEMENT TO TAKE CERTAIN ACTIONS
WITH RESPECT TO THE HEALTH INSURANCE PROGRAM
CARRIED OUT UNDER CHAPTER 89 OF TITLE 5,
UNITED STATES CODE, AND FOR OTHER PURPOSES
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
September 10, 2024.--Ordered to be printed
__________
U.S. GOVERNMENT PUBLISHING OFFICE
WASHINGTON : 2024
-----------------------------------------------------------------------------------
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware RAND PAUL, Kentucky
MAGGIE HASSAN, New Hampshire RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona JAMES LANKFORD, Oklahoma
JACKY ROSEN, Nevada MITT ROMNEY, Utah
JON OSSOFF, Georgia RICK SCOTT, Florida
RICHARD BLUMENTHAL, Connecticut JOSH HAWLEY, Missouri
LAPHONZA R. BUTLER, California ROGER MARSHALL, Kansas
David M. Weinberg, Staff Director
Alan S. Kahn, Chief Counsel
Lena C. Chang, Director of Governmental Affairs
Devin M. Parsons, Senior Professional Staff Member
William E. Henderson III, Minority Staff Director
Christina N. Salazar, Minority Chief Counsel
Andrew J. Hopkins, Minority Counsel
Laura W. Kilbride, Chief Clerk
Calendar No. 499
118th Congress} { Report
SENATE
2d Session } { 118-220
======================================================================
FEHB PROTECTION ACT
_______
September 10, 2024.--Ordered to be printed
_______
Mr. Peters, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 4035]
[Including cost estimate of the Congressional Budget Office]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 4035), to require
the Director of the Office of Personnel Management to take
certain actions with respect to the health insurance program
carried out under chapter 89 of title 5, United States Code,
and for other purposes, having considered the same, reports
favorably thereon with an amendment in the nature of a
substitute and recommends that the bill, as amended, do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................5
IV. Section-by-Section Analysis of the Bill, as Reported.............5
V. Evaluation of Regulatory Impact..................................6
VI. Congressional Budget Office Cost Estimate........................7
VII. Changes in Existing Law Made by the Bill, as Reported...........11
I. PURPOSE AND SUMMARY
S. 4035, the FEHB Protection Act, addresses issues
identified by the Government Accountability Office (GAO)
regarding the Office of Personnel Management's (OPM) monitoring
of the Federal Employees Health Benefits (FEHB) program for
ineligible family members enrolled in or covered by FEHB
plans.\1\ The bill directs OPM to issue regulations to require
the employing offices at federal agencies to verify the
eligibility of family members added to the FEHB plans during
open season or due to qualifying life events, such as marriage
or the birth of a child. This bill further directs OPM, in
coordination with employing offices, to conduct a comprehensive
eligibility audit of family members enrolled in FEHB plans.
During the three-year audit process, the bill requires periodic
reporting from OPM to Congress on the number of enrolled family
member reviewed as part of the audit, the number identified as
ineligible, and the number who are disenrolled or whose amount
of coverage is reduced. Finally, the bill requires OPM to
establish a process to disenroll ineligible individuals from
FEHB plans or remove them from FEHB coverage.
---------------------------------------------------------------------------
\1\Government Accountability Office, Federal Employees Health
Benefits Program: Additional Monitoring Mechanisms and Fraud Risk
Assessment Needed to Better Ensure Member Eligibility (GAO-23-105222)
(Dec. 9, 2022).
---------------------------------------------------------------------------
II. BACKGROUND AND NEED FOR THE LEGISLATION
The FEHB program is the largest employer-sponsored group
health insurance program in the country, covering federal
employees, retirees, former employees, and their families.\2\
In fiscal year 2021, the FEHB program provided health insurance
benefits to more than 8.2 million individuals, including 2.2
million federal employees, 1.9 million retirees, and 4.1
million family members, at a cost of approximately $59
billion.\3\ OPM administers the FEHB program by publishing
regulations and guidance and contracting with qualified health
insurance carriers, among other responsibilities. OPM estimates
improper payments cost the federal government between $260
million and $1 billion per year and the OPM Office of Inspector
General (OIG) estimates ineligible coverage costs the federal
government between $250 million and $3 billion per year.\4\
Health insurance carriers that provide FEHB coverage contract
with OPM to offer certain health benefits to all individuals
who enroll in their participating health plans. The offices
responsible for health benefits at federal agencies, also known
as ``employing offices,'' and the FEHB health insurance
carriers bear responsibility for enrolling federal employees in
FEHB plans and adding coverage for eligible family members.\5\
Eligible individuals have three opportunities to enroll in FEHB
coverage: (1) when they are newly hired; (2) during the annual
FEHB open season that generally runs from the second week of
November to the second week of December; and (3) for a specific
length of time in connection to a qualifying life event like a
marriage, divorce, or the birth of a child. OPM has delegated
responsibility to employing offices to make eligibility
determinations for enrollees and covered family members.\6\
---------------------------------------------------------------------------
\2\Id. at 1; See also, Office of Personnel Management, FEHB
Handbook (www.opm.gov/healthcare-insurance/healthcare/reference-
materials/fehb-handbook/) (accessed May 22, 2024).
\3\Government Accountability Office, supra note 1, at 1 and 4.
\4\Id. at 15; and Office of Personnel Management, Office of
Inspector General, Office of Audits, Final Report: The U.S. Office of
Personnel Management's Top Management Challenges for Fiscal Year 2024
(Oct. 11, 2023), at 5.
\5\Id. at 1; Office of Personnel Management, supra note 2.
\6\Government Accountability Office, supra note 1, at 5; and Office
of Personnel Management, supra note 2.
---------------------------------------------------------------------------
Since 2020, the OPM OIG has identified FEHB program
enrollment and eligibility as a top management challenge for
OPM, due to weaknesses in the approach used by OPM and
employing offices to identify, prevent, and remove ineligible
family members enrolled in FEHB plans.\7\ In 2020, the OPM OIG
raised concerns about OPM's limited oversight of how employing
offices and health insurances carriers verify the eligibility
of family members added to FEHB plans. The OIG recommended that
OPM require employing offices to verify the eligibility of
family members at the time of initial enrollment and require
health insurance carriers to verify the eligibility of family
members when added to a current FEHB plan.\8\
---------------------------------------------------------------------------
\7\Office of Personnel Management, Office of the Inspector General,
Top Management Challenges: Fiscal Year 2020 (Jan. 30, 2020); Office of
Personnel Management, Office of the Inspector General, Office of
Audits, Final Report: The U.S. Office of Personnel Management's Top
Management Challenges for Fiscal Year 2021 (Oct. 16, 2020); Office of
Personnel Management, Office of the Inspector General, Office of
Audits, Final Report: The U.S. Office of Personnel Management's Top
Management Challenges for Fiscal Year 2022 (Oct. 13, 2021); Office of
Personnel Management, Office of the Inspector General, Office of
Audits, Final Report: The U.S. Office of Personnel Management's Top
Management Challenges for Fiscal Year 2023 (Oct. 13, 2022); Office of
Personnel Management, Office of the Inspector General, Office of
Audits, Final Report: The U.S. Office of Personnel Management's Top
Management Challenges for Fiscal Year 2024 (Oct. 11, 2023).
\8\Office of Personnel Management, Office of the Inspector General,
Top Management Challenges: Fiscal Year 2020 at 21, (Jan. 30, 2020).
---------------------------------------------------------------------------
OPM has taken steps to address the concerns identified by
the OPM OIG on ineligible individuals enrolled in FEHB plans.
Starting in April 2021, OPM required employing offices to
validate the eligibility of newly enrolled employees and family
members as well as employees changing their coverage due to a
qualifying life event.\9\ OPM also issued guidance to the FEHB
health insurance carriers that requires them to obtain proof of
family member eligibility when adding family members to certain
existing plans.\10\
---------------------------------------------------------------------------
\9\Office of Personnel Management, Family Member Eligibility
Verification for Federal Employees Health Benefits Program Coverage,
Benefits Administration Letter 21-202 (Apr. 15, 2021) (www.opm.gov/
retirement-center/publications-forms/benefits-administration-letters/
2021/21-202.pdf).
\10\Office of Personnel Management, Family Member Eligibility
Verification for Federal Employees Health Benefits Program Coverage,
Federal Employees Health Benefits Program Carrier Letter 2021-06 (April
15, 2021) (https://www.opm.gov/healthcare-insurance/carriers/fehb/2021/
2021-06.pdf).
---------------------------------------------------------------------------
However, despite OPM's steps, in December 2022, GAO
highlighted some continued concerns about ineligible family
members enrolled in FEHB plans. GAO found that OPM relies on
employing offices and FEHB health insurance carriers to
identify and remove ineligible family members, yet OPM had not
designed or implemented monitoring mechanisms to detect and
address ineligible family member enrollment, including
monitoring to ensure employing offices and health insurance
carriers comply with OPM's existing guidance on verification
requirements for new-hire and qualifying-life event
enrollments.\11\ GAO also found that OPM did not include
ineligible members as a component of the agency's annual fraud
risk assessment.\12\
---------------------------------------------------------------------------
\11\Government Accountability Office, supra note 1, at 12 and 14.
\12\Id. at 20.
---------------------------------------------------------------------------
In response to GAO's findings and recommendations, OPM
concurred with three of the four recommendations and partially
concurred with the other.\13\ OPM agreed to assess the
likelihood and impact of fraud risk related to ineligible
individuals enrolled in FEHB plans going forward and document
the fraud risk of those individuals as part of the development
of a fraud risk profile. In addition, OPM said it planned to
implement internal procedures to identify ineligible family
members using the limited data it has available.\14\ OPM
partially concurred with GAO's recommendation on implementing a
monitoring mechanism to ensure employing offices and health
insurance carriers are verifying family member eligibility,
outlining several steps already in place to improve monitoring,
such as surveying employing offices and health insurance
carriers to confirm their adherence to the guidance and
providing training to employing offices and health insurance
carriers on monitoring activities. Although OPM agreed that
additional monitoring may be appropriate, such as through a
comprehensive audit, OPM noted that the ability to carry out
such monitoring is subject to the availability of funding and
staffing levels.\15\ Furthermore, OPM noted that the agency is
focused on pursuing funding to build a more centralized
enrollment system for the FEHB program that would better enable
OPM oversight, reflected also in a proposal OPM incorporated
into its fiscal year 2025 Congressional Budget
Justification.\16\
---------------------------------------------------------------------------
\13\Id. at 23.
\14\Id. at 29.
\15\Id. at 28-29.
\16\ Id.at 18; See also, Office of Personnel Management,
Congressional Budget Justification and Annual Performance Plan FY2025
(Mar. 2024) (www.opm.gov/about-us/fy-2025-congressional-budget-
justification-and-annual-performance-plan/fy-2025-congressional-budget-
justification-and-annual-performance-plan.pdf).
---------------------------------------------------------------------------
In April 2024, OPM issued additional guidance requiring
employing offices to conduct a random sample review of at least
10% of open season changes to enrollment in FEHB plans for the
2024 open season. The guidance suggests OPM will increase the
size of the random sample in future years.\17\ Along with the
guidance, OPM announced plans to use an FEHB Master Enrollment
Index to run data queries to identify current enrollment
irregularities. The announcement also described how the current
FEHB eligibility determination and enrollment process requires
cooperation among nearly 100 employing offices and 68 health
insurance carriers, again referencing OPM's interest in
pursuing access to funds for establishing a centralized
enrollment system for the FEHB program.\18\
---------------------------------------------------------------------------
\17\Office of Personnel Management, Annual Agency Review of FEHB
Open Season Actions--Family Member Eligibility, Benefits Administration
Letter 2021-06 (Apr. 17, 2024) (www.opm.gov/retirement-center/
publications-forms/benefits-administration-letters/2024/24-201.pdf).
\18\Office of Personnel Management: OPM Issues New Benefits
Administration Letter to Promote the Integrity of the Federal Employees
Health Benefits Program (Apr. 17, 2024) (www.opm.gov/news/releases/
2024/04/opm-issues-new-bal-to-promote-the-integrity-of-the-federal-
employees-health-benefits-program).
---------------------------------------------------------------------------
The FEHB Protection Act aims to further address the issues
identified by GAO and OPM OIG related to ineligible family
member enrollment in FEHB plans, by directing OPM to require
that employing offices verify the enrollment of family members
added during the FEHB open season as well as during qualifying
life events. The bill also directs OPM, in coordination with
employing offices, to conduct a comprehensive audit of the
family members currently enrolled in FEHB plans for the
purposes of identifying improper payments and fraud and
removing ineligible individuals from FEHB plans. In addition,
the bill requires OPM to consider the risk of ineligible family
members in its annual fraud risk assessments related to FEHB
enrollment, which GAO identified as a weakness of OPM's current
assessments of fraud risk.\19\ Finally, the bill would improve
transparency to Congress by requiring OPM to provide periodic
reporting every six months for three years on the number of
enrolled family members reviewed as part of the comprehensive
audit, the number identified as ineligible, and the number who
are disenrolled or whose coverage is reduced.
---------------------------------------------------------------------------
\19\Government Accountability Office, supra note 1, at 20.
---------------------------------------------------------------------------
Conducting a comprehensive audit of the more than 4 million
family members enrolled in FEHB plans will likely be a large
undertaking for OPM. OPM expressed concern during GAO's audit
regarding conducting a one-time audit of all FEHB family
members given the size and scope of the program. GAO suggested
OPM could structure a comprehensive audit over several years
rather than conducting it at once, as well as consider
alternative structures and methodologies for the audit.
Auditing enrolled or covered family members requires additional
resources.\20\
---------------------------------------------------------------------------
\20\Id. at 16.
---------------------------------------------------------------------------
Together, the provisions of the bill would reduce costs to
the federal government by identifying, addressing, and
preventing improper payments to ineligible FEHB enrollees.
Within the FEHB program, these improper payments are in the
form of health insurance premiums paid by employing offices to
health insurance carriers.\21\ The provisions of this bill
would also help and improve the integrity and long term
viability of the FEHB program overall.
---------------------------------------------------------------------------
\21\Id. at 6.
---------------------------------------------------------------------------
III. LEGISLATIVE HISTORY
Senator Rick Scott (R-FL) introduced S. 4035, the FEHB
Protection Act, on March 31, 2024, with original cosponsor
Senator Tom Carper (D-DE). The bill was referred to the
Committee on Homeland Security and Governmental Affairs.
The Committee considered S. 4035 at a business meeting on
May 15, 2024. At the business meeting, Senator Scott offered a
substitute amendment to the bill. The substitute amendment
makes technical changes to incorporate feedback from OPM and
other stakeholders, including adjusting the timing of the
audit, involving the heads of employing offices in the audit
process, and requiring periodic reporting from OPM to Congress.
The Committee adopted the substitute amendment by unanimous
consent, with Senators Peters, Carper, Hassan, Rosen,
Blumenthal, Paul, Lankford, Romney, Scott, Hawley, and Marshall
present. The bill was ordered reported favorably by roll call
vote of 11 yeas to 0 nays, with Senators Peters, Carper,
Hassan, Rosen, Blumenthal, Paul, Lankford, Romney, Scott,
Hawley, and Marshall voting in the affirmative. Senators
Sinema, Ossoff, Butler, and Johnson voted yea by proxy, for the
record only.
IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED
Section 1. Short title
This section establishes the short title of the bill as the
``FEHB Protection Act.''
Section 2. FEHB improvements
Subsection (a) defines the terms ``appropriate committees
of Congress,'' ``Director,'' ``employing office,'' ``health
benefits plans; member of family,'' ``open season,''
``program,'' and ``qualifying life event'' for the purposes of
this section.
Subsection (b) requires that within one year of the bill's
enactment, the Director of OPM issue regulations requiring
employing offices to implement a process to verify the
qualifying life event during which an enrollee in a FEHB plan
seeks to add a family member and verify that any individuals
added by enrollees to FEHB plans are actually family members,
including individuals added during the annual open season for
FEHB enrollment.
Subsection (c) requires the Director of OPM to include an
assessment of ineligible individuals enrolled in FEHB plans as
part of its annual fraud risk assessments.
Subsection (d) requires the Director of OPM, in
coordination with the head of each employing office, to conduct
a comprehensive audit of family members enrolled or covered
under FEHB plans. The audit is to take place during the three-
year period that is one year after the bill's enactment. As
part of the audit, the Director, in coordination with the heads
of employing offices, is required to request documentation
verifying the eligibility of family members enrolled in or
covered under FEHB plans. This subsection also requires the
Director to report to Congress every 180 days, for each of the
three years of the audit, on the number of family members
reviewed as part of the audit, the number of family members
found to be ineligible, and the number of family members
disenrolled or whose coverage is reduced.
Subsection (e) requires that within 180 days after the
bill's enactment, the Director of OPM establish a process to
disenroll or remove ineligible individuals from FEHB plans.
V. EVALUATION OF REGULATORY IMPACT
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that the bill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional
Budget Office's statement that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments.
VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The bill would:
Require agencies to verify the eligibility
of dependents enrolled in the Federal Employees Health
Benefits program when the employee or annuitant starts
or changes a dependent's enrollment
Require the Office of Personnel Management
to audit dependents' enrollment in the program
Expand fraud risk assessments of the program
to include information on ineligible enrollees
Deny enrollment to ineligible dependents or
disenroll them from the program
Estimated budgetary effects would mainly stem from:
Conducting an enrollment audit of the
program
Disenrolling ineligible dependents
Areas of significant uncertainty include:
Predicting the number and timing of
dependents who would be found ineligible
Projecting the reductions in spending that
would be generated by disenrollment of ineligible
dependents
Bill summary: S. 4035 would require federal agencies to
verify the eligibility of enrollees' dependents to participate
in the Federal Employees Health Benefits (FEHB) program.
Verification would occur when the employee or annuitant starts
or changes a dependent's enrollment--for example, during open
season, because of a change in employment, or in response to a
qualifying life event, such as a marriage or the birth or
adoption of a child. Within four years of enactment, the bill
would require the Office of Personnel Management (OPM) to
conduct and periodically report to the Congress on, a
verification audit of all dependents enrolled in the program.
Dependents found to be ineligible would be denied enrollment or
disenrolled. The bill also would expand OPM's annual assessment
of fraud risk to include a risk assessment of ineligible
enrollees.
Estimated Federal costs: The estimated budgetary effect of
S. 4035 is shown in Table 1. The costs of the legislation fall
within budget functions 370 (commerce and housing credit), 550
(health), and 800 (general government).
Basis of estimate: For this estimate, CBO assumes that the
legislation will be enacted near the end of fiscal year 2024
and that the verification audit would be conducted over the
2026-2031 period.
Background: The FEHB program provides health insurance for
federal workers and annuitants, including current and retired
employees of the Postal Service, and for their dependents and
survivors. Under the program, the government covers up to 75
percent of the cost of enrollees' premiums for active employees
and annuitants.\1\ About 8 million people are projected to
enroll in the FEHB program in 2025, with government
contributions estimated to total about $50 billion in that
year. The estimated average annual cost to include a dependent
in the program is $6,500. Spending on premiums for federal
annuitants and Postal Service employees is classified in the
budget as direct spending; spending for federal employees is
classified as spending subject to appropriation.
---------------------------------------------------------------------------
\1\The bill's requirements also would apply to the Postal Service
Health Benefits Program, a separate program within FEHB. Government
contributions for participants in the Postal Service's program are
determined by a collective bargaining agreement.
---------------------------------------------------------------------------
Agencies currently verify dependents' eligibility at
initial enrollment or when employees change their coverage at
the time of a qualifying life event. OPM requires federal
agencies to verify 10 percent of enrollment elections during
open season. However, the Government Accountability Office
indicates that ineligible dependents currently are enrolled and
that additional measures could be taken to reduce fraud in the
program.\2\
---------------------------------------------------------------------------
\2\Government Accountability Office, Federal Employees Health
Benefits Program: Additional Monitoring Mechanisms and Fraud Risk
Assessment Needed to Better Ensure Member Eligibility, GAO-23-105222
(January 2023), www.gao.gov/products/gao-23-105222.
---------------------------------------------------------------------------
Spending subject to appropriation: CBO estimates that
implementing S. 4035 would result in disenrolling or denying
enrollment to dependents in the FEHB program and thus would
reduce federal costs, on net, by about $1 billion over the
2024-2029 period and by about $4 billion over the 2024-2034
period. Any reduction in discretionary spending would be
subject to reductions in appropriations by the estimated
amounts. Those net amounts include administrative costs that
would be more than offset by reductions in the federal share of
employees' premiums because of disenrollments from the FEHB
program.
TABLE 1.--ESTIMATED CHANGES IN SPENDING SUBJECT TO APPROPRIATION UNDER S. 4035
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
----------------------------------------------------------------------------------------------------------------------
2024- 2024-
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2029 2034
--------------------------------------------------------------------------------------------------------------------------------------------------------
Administrative Costs:
Estimated Authorization...... 0 66 0 0 0 0 0 0 0 0 0 66 66
Estimated Outlays............ 0 * 6 12 11 12 11 7 2 2 3 41 66
Disenrollment Effects:
Estimated Authorization...... 0 0 -65 -191 -306 -424 -545 -601 -588 -576 -563 -986 -3,859
Estimated Outlays............ 0 0 -65 -191 -306 -424 -545 -601 -588 -576 -563 -986 -3,859
Total Changes:
Estimated Authorization...... 0 66 -65 -191 -306 -424 -545 -601 -588 -576 -563 -920 -3,793
Estimated Outlays............ 0 * -59 -179 -295 -412 -534 -594 -586 -574 -560 -945 -3,793
Memorandum:
Contingent and Nonscoreable
Changes in Direct Spending:a
Direct Spending.............. 0 0 -38 -110 -174 -240 -307 -338 -331 -325 -318 -562 -2,181
On-Budget................ 0 0 -36 -105 -169 -234 -301 -332 -325 -318 -311 -544 -2,131
Off-Budgetb.............. 0 0 -2 -5 -5 -6 -6 -6 -6 -7 -7 -18 -50
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = between zero and $500,000.
aAssuming that appropriation amounts consistent with the bill are provided in subsequent legislation, CBO estimates that disenrolling ineligible
dependents would reduce direct spending. Under the scorekeeping guidelines agreed to by the legislative and executive branches, the direct spending
amounts also would be excluded from the effects attributed to subsequent legislation providing funding for the audit. Those amounts would be reflected
in CBO's baseline budget projections after the bill's enactment.
bIncludes estimated savings for the Postal Service, whose cash flows are classified as off-budget.
Administrative costs: CBO anticipates that OPM would
implement the bill's auditing requirements using contracts with
private-sector entities. Given the time needed and the
complexity of such an undertaking, CBO expects that the audit
would begin in 2026 and continue until 2031. CBO estimates that
the cost of the audit and other verifications would total $66
million over the 2024-2034 period. Any spending would be
subject to the provision of sufficient appropriations in
subsequent legislation.
Using information from state governments and large private-
sector employers, CBO estimates that the cost to audit the
enrollment of about 4 million dependents would be about $13 per
enrollee. On that basis, the verification audit would cost $50
million over the 2024-2034 period. CBO expects that OPM also
would need the equivalent of two full-time employees to oversee
the audit and fulfill the reporting requirements, at a cost of
about $3 million over the 2024-2034 period.
Under OPM's current guidance, only 10 percent of enrollment
changes made during open season are subject to verification.
CBO estimates that, under the bill, verifying the other 90
percent would require federal agencies to incur $12 million in
costs over the 2024-2034 period for salaries and expenses. In
addition, about $1 million would be needed over the same period
for additional staff to expand fraud risk assessments.
S. 4035 would largely codify the current practice of
verifying enrollees' eligibility at the time of initial
enrollment or when changes occur as a result of a qualifying
life event. CBO estimates that implementing that requirement
would have no budgetary effect.
Disenrollment effects: CBO expects that, contingent on
subsequent appropriations for an audit and for other activities
required under the bill, ineligible dependents would be denied
enrollment or removed from the FEHB program. As a result,
implementing the bill would reduce spending subject to
appropriation for the FEHB by an estimated $3.9 billion over
the 2024-2034 period. CBO expects that the decline in
enrollment would accelerate over the 2026-2031 period as the
audit proceeds.
Using data on the composition of the FEHB enrollment, along
with information about the share of dependents who have been
removed as a result of other verification audits, CBO expects
that implementing the bill would cause enrollment to decline by
about 100,000 people, on average, in each year over the 2025-
2034 period. Verifications of eligibility during open season
would cause a decline of about 10,000 people, on average, in
each year over the same period.
Contingent and nonscoreable changes in direct spending:
Assuming that subsequent legislation provides appropriations
that are sufficient and consistent with the bill's provisions,
CBO estimates that about 35 percent of the people who were
disenrolled would be ineligible dependents of federal
annuitants and Postal Service employees. Their disenrollment
would reduce direct spending by $2.1 billion over the 2024-2034
period (see the memorandum in Table 1).
That amount includes a $50 million reduction in off-budget
spending, which is how the cash flows of the Postal Service are
categorized in the federal budget. Under the scorekeeping
guidelines agreed to by the legislative and executive branches,
those reductions in direct spending would not be included in
effects attributed to subsequent legislation that provided
funding for the audit; however, they would be reflected in
CBO's baseline budget projections after enactment.\3\
---------------------------------------------------------------------------
\3\For more information on the guidelines, see Congressional Budget
Office, CBO Explains Budgetary Scorekeeping Guidelines (January 2021),
www.cbo.gov/publication/56507.
---------------------------------------------------------------------------
Uncertainty: CBO's estimate of the budgetary effects of S.
4035 is subject to significant uncertainty because no similar
verification audit of the FEHB program has been undertaken. CBO
projected the cost of an audit, the number of dependents who
would be found ineligible, and the number disenrolled, but the
actual numbers could be higher or lower than estimated.
Moreover, given the inherent uncertainty concerning patterns of
health care use by people who would newly be found ineligible,
the reductions in spending that would be generated by an audit
also could be larger or smaller than estimated here.
Mandates: The bill contains no intergovernmental or
private-sector mandates as defined in the Unfunded Mandates
Reform Act.
Previous CBO estimate: On August 16, 2024, CBO transmitted
a cost estimate for H.R. 7868, the FEHB Protection Act of 2024,
as ordered reported by the House Committee on Homeland Security
and Government Affairs on April 10, 2024. The two bills are
similar, and CBO's estimates of both bills are the same.
Estimate prepared by: Federal costs: Emily Vreeland;
Mandates: Grace Watson.
Estimate reviewed by: Ann E. Futrell, Senior Adviser,
Budget Analysis Division; Sarah Masi, Senior Adviser, Budget
Analysis Division; Kathleen FitzGerald, Chief, Public and
Private Mandates Unit; Chad Chirico, Director of Budget
Analysis.
Estimate approved by: Phillip L. Swagel, Director,
Congressional Budget Office.
VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
This legislation would make no change in existing law,
within the meaning of clauses (a) and (b) of subparagraph 12 of
rule XXVI of the Standing Rules of the Senate, because this
legislation would not repeal or amend any provision of current
law.
[all]