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95–156 PDF 2004

WE’D LIKE TO SEE YOU SMILE: THE NEED FOR

DENTAL AND VISION BENEFITS FOR FEDERAL

EMPLOYEES

HEARING

BEFORE THE

SUBCOMMITTEE ON CIVIL SERVICE

AND AGENCY ORGANIZATION

OF THE

COMMITTEE ON GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

ON

H.R. 3751

TO REQUIRE THAT THE OFFICE OF PERSONNEL MANAGEMENT STUDY

AND PRESENT OPTIONS UNDER WHICH DENTAL AND VISION BENEFITS COULD BE MADE AVAILABLE TO FEDERAL EMPLOYEES AND RETIREES AND OTHER APPROPRIATE CLASSES OF INDIVIDUALS

FEBRUARY 24, 2004

Serial No. 108–173

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

TIM MURPHY, Pennsylvania

MICHAEL R. TURNER, Ohio

JOHN R. CARTER, Texas

MARSHA BLACKBURN, Tennessee

——— ———

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland

ELEANOR HOLMES NORTON, District of

Columbia

JIM COOPER, Tennessee

——— ———

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON CIVIL SERVICE AND AGENCY ORGANIZATION

JO ANN DAVIS, Virginia, Chairwoman

TIM MURPHY, Pennsylvania

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

ADAH H. PUTNAM, Florida

NATHAN DEAL, Georgia

MARSHA BLACKBURN, Tennessee

DANNY K. DAVIS, Illinois

MAJOR R. OWENS, New York

CHRIS VAN HOLLEN, Maryland

ELEANOR HOLMES NORTON, District of

Columbia

JIM COOPER, Tennessee

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

RON MARTINSON, Staff Director

CHRIS BARKLEY, Professional Staff Member

REID VOSS, Clerk

TANIA SHAND, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on February 24, 2004 ....................................................................... 1

Text of H.R. 3751 ..................................................................................................... 4

Statement of:

Block, Abby, Deputy Associate Director, Office of Personnel Management;

Ed Wristen, president and CEO, First Health; Dr. Stan Shapiro, vice

chairman, CompBenefits; Jon Seltenheim, chairman, National Association of Dental Plans; and Howard J. Braverman, O.D., past president,

American Optometric Association ............................................................... 11

Letters, statements, etc., submitted for the record by:

Block, Abby, Deputy Associate Director, Office of Personnel Management,

prepared statement of ................................................................................... 13

Braverman, Howard J., O.D., past president, American Optometric Association, prepared statement of ..................................................................... 74

Davis, Chairman Tom, a Representative in Congress from the State of

Virginia, prepared statement of ................................................................... 70

Davis, Hon. Danny K., a Representative in Congress from the State

of Illinois, prepared statement of ................................................................ 8

Davis, Hon. Jo Ann, a Representative in Congress from the State of

Virginia, prepared statement of ................................................................... 3

Seltenheim, Jon, chairman, National Association of Dental Plans, prepared statement of ........................................................................................ 51

Shapiro, Dr. Stan, vice chairman, CompBenefits, prepared statement of ... 32

Wristen, Ed, president and CEO, First Health, prepared statement of ...... 18

(1)

WE’D LIKE TO SEE YOU SMILE: THE NEED

FOR DENTAL AND VISION BENEFITS FOR

FEDERAL EMPLOYEES

TUESDAY, FEBRUARY 24, 2004

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON CIVIL SERVICE AND AGENCY

ORGANIZATION,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 3:11 p.m., in room

2247, Rayburn House Office Building, Hon. Jo Ann Davis (chairwoman of the subcommittee) presiding.

Present: Representatives Davis of Virginia, Blackburn, Chairman

Tom Davis (ex officio), Davis of Illinois, Norton, and Van Hollen.

Staff present: Ron Martinson, staff director; Chad Bungard, deputy staff director; Rob White, communications director; Chris Barkley, professional staff member; Reid Voss, clerk; John Landers,

detailee; Tania Shand, minority professional staff member; and Teresa Coufal, minority assistant clerk.

Mrs. DAVIS OF VIRGINIA. A quorum being present, the Subcommittee on Civil Service and Agency Organization will come to

order.

I want to thank you all for joining us today as we take a look

at how we can make available better dental and vision benefits for

members of the Federal family. I know this issue is of great importance to Federal employees, retirees, and their families. These two

benefits are consistently at the top of their wish list.

Earlier this year I introduced H.R. 3751, which requires the Office of Personnel Management to study the options for enhancing

Federal dental and vision benefits, and to issue a recommendation

to Congress by June 30th of this year. I felt it was time for OPM

to reevaluate its dental and eye care offerings to the Federal Employees Health Benefits Program.

For reasons that I expect OPM to explain in detail here today,

the dental and vision benefits offered through the FEHBP have essentially remained unchanged for about 15 years. A lot has

changed in that time. Primarily we have learned a great deal more

about the importance of dental and vision care to our overall

health. I think it is a black mark against the Federal Government

that its current dental and vision offerings are so meager.

We have held several hearings in this subcommittee and endorsed several pieces of legislation to assist the Federal Government in attracting and retaining talented workers. Employee beneVerDate 11-MAY-2000 10:52 Aug 16, 2004 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\95156.TXT HGOVREF1 PsN: HGOVREF1
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fits are another piece in this puzzle, because the Federal Government is lagging behind its competitors. Just look at dental benefits.

Nearly every midsized and large private sector firm offers fairly

generous dental care. Federal employees understand this disparity.

My hope is that this hearing and my introduction of H.R. 3751

can be the start of a collaborative process by which the House, the

Senate, the administration, and industry representatives can determine the best way to enhance both dental and vision benefits while

maintaining the overall strength of the FEHBP.

I want to thank you all for being here today.

And I would like to recognize my ranking member, Mr. Davis, to

see if he has an opening statement.

[The prepared statement of Hon. Jo Ann Davis and the text of

H.R. 3751 follow:]

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Mr. DAVIS OF ILLINOIS. Thank you very much, Madam Chairwoman, and let me thank the witnesses for coming.

Visual health and oral health are integral to general health. Eye

and oral diseases are progressive and becoming more complex over

time. Our ability to eat, see, read, learn, and communicate all depends on good visual and oral health.

Periodic eye and dental examinations are an important part of

routine preventative health care. Many visual and oral conditions

present no obvious symptoms; therefore, individuals are often unaware that problems exist.

There are safe and effective measures to prevent the most common eye and dental diseases. That is why early diagnosis and

treatment are important for maintaining good visual and oral

health and why a vision and dental benefit should be made available to Federal employees and annuitants.

We know that in 1987 the Office of Personnel Management

stopped plans in the Federal health benefits program from adding

new vision and dental packages. OPM did so for various reasons.

However, that decision was made more than 15 years ago, and it

is now time to take a fresh look at how we can meet the visual and

oral health needs of Federal employees.

Let’s not be shortsighted. In the long run, preventive care

through periodic examinations and doctor visits will help keep

down long-term vision and dental costs due to early detection.

I have worked in the health area for many years and prior to

running for public office actually served as president of the National Association of Community Health Centers, and health was

something that I paid a great deal of time on and attention to, and

I often wondered why we didn’t put as much emphasis on prevention and early detection even as we talked about cost containment

and lowering the costs of health care. I think that we can be most

effective in improving health status when we make sure that each

and every individual has optimal opportunity to prevent themselves from getting ill to the point where they have to be institutionalized, hospitalized, or have expensive doctor visits and perhaps even surgery.

So, Madam Chairwoman, I thank you for holding this hearing,

and look forward to some very positive results.

[The prepared statement of Hon. Danny K. Davis follows:]

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Mrs. DAVIS OF VIRGINIA. Thank you, Mr. Davis.

I would now like to recognize Ms. Holmes Norton for an opening

statement.

Ms. NORTON. Thank you very much, Madam Chairwoman, and I

very much appreciate your interest in augmenting the FEHBP and

your bill, as well as your study.

Even without vision and oral care, the FEHBP is behind the

great Fortune 500 companies and has been for some time. So the

fact that we are trying to catch up is nothing to congratulate ourselves about, but I am very pleased to see leadership of the Chair

in focusing on yet another shortcoming. The problem I have is of

course that when you already have a benefit plan where the employer does not pay what it would pay if it were a Fortune 500

company—and the last time I looked, there isn’t a Fortune 500

company as big as the government of the United States—then of

course to go forward and add to that raises yet another question,

and that is who is going to pay for it. I think that employees should

wonder whether we are going to get the kind of benefit that they

got with long-term care: 100 percent paid for by the employee. In

that case, the employer becomes a vessel.

Thank you very much, and it’s good to have those who can afford

it get it, but I would hate to see the idea of cost sharing gradually

disappear from the FEHBP.

Now, you could argue that with long-term care it’s so expensive

that’s why the Federal Government couldn’t possibly do it. Well, it

could have done something. It could have done a little bit of it. But

it did none of it. So my question, at a time when people all over

the United States are striking, not for wages but for loss of health

care, my question is, is the employer ready to pick up his share

along with the employee? Because, if not, I’m not sure how the employees will look at this.

Employees who can already afford it perhaps already pay for

their dental care or for their oral care, so the employees I’m most

concerned about are employees in the lower grades for whom some

subsidy here could have some real meaning. And we have to recognize that employers who pick up part or all of the cost of health

care in fact are calculating that in their wages. So in fact it’s not

ever free to the employee. But if the employee only becomes a vessel, then I’m not sure what role the employer is playing except to

provide a group umbrella. And I suppose we should all be grateful

for small favors. There are a lot of those group umbrellas that people can join right now. You can go out and join other kinds of

groups outside of your employer today because they are forming as

a result of the cost of health care.

I am very concerned about the rising cost of FEHBP. I am not

among those who hold FEHBP up the way it is always held up in

all Presidential campaigns. They say look at this FEHBP. I know

that Federal employees must say what are they talking about? If

our costs are going up 10 percent a year or 12 percent a year or

15 percent a year, what is happening out there in the rest of the

marketplace?

So I am concerned about how we would pay for this. And, frankly, I have a hard time with this if in fact there was not cost sharing

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here, because I believe it would be the beginning of the end of cost

sharing.

I would love to know what the figures are in the public sector.

In the private sector there are many millions of people who are

dropping their own health care or dropping family members or having employers drop health care or offload more of it onto employees

because of the rising cost of health care. So if this is an add-on to

today’s health care cost for the employee, then I think the committee would want to look more closely at what we are doing for the

employees, and I think that Uncle Sam ought to be willing to step

up to the plate the way far smaller employers than our government

does.

Thank you very much, Madam Chairwoman.

Mrs. DAVIS OF VIRGINIA. Thank you, Ms. Norton. That’s why

we’ve asked OPM to do a study on it and to give us some recommendations, because if we do anything we want to make sure

we do what’s right for the employees.

And I would just testify from my own personal experience. I don’t

take FEHBP. I opted not to when I was elected because my husband’s insurance through the city where he worked, where he retired from was actually better. But from a personal standpoint, I

just spent $13,000 out of my own pocket for dental because we

don’t have dental. So if there is some way that we can help the

Federal employees, we want to do that.

Ms. NORTON. Now we see an additional motivation, Madam

Chairwoman.

Mrs. DAVIS OF VIRGINIA. Actually, that was after the fact. But it

has become an additional motivation.

Mr. Van Hollen, welcome. Do you have an opening statement?

Mr. VAN HOLLEN. No, thank you, Madam Chairwoman. Just I

appreciate the fact that you are holding this hearing and looking

into this issue. So thank you.

Mrs. DAVIS OF VIRGINIA. Thank you.

I ask unanimous consent that all Members have 5 legislative

days to submit written statements and questions for the hearing

record, and that any answers to written questions provided by the

witnesses also be included in the record. And, without objection, it

is so ordered.

I ask unanimous consent that all exhibits, documents, and other

materials referred to by Members and the witnesses may be included in the hearing record and that all Members be permitted to

revise and extend their remarks. Without objection, it is so ordered.

I also ask unanimous consent that statements from Delta Dental

of California and the National Association of Retired Employees

may be included in the hearing record. And, without objection, it

is so ordered.

I would like to welcome our panel today, and to thank you all

for coming and for being patient with us.

With us today we have Ms. Abby Block, the Deputy Associate Director of Office of Personnel Management. After Ms. Block, we will

hear from Mr. Ed Wristen, the president and CEO of First Health.

Then we are going to be hearing from Dr. Stan Shapiro. Dr. Shapiro is the vice chairman of CompBenefits. And then after Dr. Shapiro we will hear testimony from Mr. John Seltenheim, the chairVerDate 11-MAY-2000 10:52 Aug 16, 2004 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 D:\DOCS\95156.TXT HGOVREF1 PsN: HGOVREF1
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man of the National Association of Dental Plans. And, last but not

least, will be Dr. Howard J. Braverman, the past president of the

American Optometric Association.

It’s standard practice for this committee to administer the oath

to all witnesses; and if all witnesses could please stand, I will administer the oath. If you would stand, please, and raise your right

hands.

[Witnesses sworn.]

Mrs. DAVIS OF VIRGINIA. Let the record reflect that the witnesses

have answered in the affirmative, and you may be seated.

The panel will now be recognized for an opening statement, and

we ask that you summarize your testimony in 5 minutes, and that

any further statement you may wish to make will be included in

the record.

I would again like to first welcome Ms. Abby Block, and I thank

you for being with us today, Ms. Block. You are now recognized for

5 minutes.

STATEMENTS OF ABBY BLOCK, DEPUTY ASSOCIATE DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT; ED WRISTEN,

PRESIDENT AND CEO, FIRST HEALTH; DR. STAN SHAPIRO,

VICE CHAIRMAN, COMPBENEFITS; JON SELTENHEIM, CHAIRMAN, NATIONAL ASSOCIATION OF DENTAL PLANS; AND

HOWARD J. BRAVERMAN, O.D., PAST PRESIDENT, AMERICAN

OPTOMETRIC ASSOCIATION

Ms. BLOCK. Thank you, Madam Chairwoman, and members of

the subcommittee. I am pleased to appear before you today on behalf of Director Kay Coles James to discuss the views of the Office

of Personnel Management on dental and vision benefits under the

Federal Employees Health Benefits Program.

Director James has always expressed a willingness to review the

policies and programs affecting the pay and benefits of Federal employees in order to ensure their effectiveness for employees, the

Government, and the taxpayer. As you know, this year for the first

time we made flexible spending accounts available to Federal employees. Pretax dollars deposited into those accounts can be used

to cover the cost of deductibles and co-payments and other health

care costs that are not covered by FEHBP plans, and also to pay

eligible dependent care costs. Director James is firmly committed

to the ongoing review of all the benefits offered under the FEHB

Program.

Of course, given the ever increasing cost of providing health benefits coverage throughout the Nation, we must be mindful of the effects of any changes on the cost of coverage for Federal employees,

retirees, and their families. Under the leadership of Director

James, and through a combination of tough negotiating and careful

scrutiny, we have managed to restrain the cost increases for our

program in recent years below the level for the economy generally.

We would not want to do anything that would not reflect the same

level of due diligence and careful concern.

With regard to your bill, H.R. 3751 would of course require OPM

to study and present recommendations under which dental and vision benefits could be made available to Federal employees and retirees and other appropriate classes of individuals. Regrettably,

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since the bill was introduced so recently, the administration has

not yet developed a position. Therefore, I am not able to express

a view on it at this time. I can say, however, that even where there

is no objection to conducting a study or review, traditionally the administration has objected to any statutory requirement to make

recommendations.

I will, of course, be happy to discuss the extent of dental and vision coverage under the current FEHB Program. At Director

James’ request, we have been gathering information on dental and

vision care programs so we can be aware of the practices of other

employers and cognizant of industry trends. I also would be happy

to offer any information I have about how such programs are structured and administered by the industry for other purchasers. I

would be pleased to answer any questions you might have in that

regard.

[The prepared statement of Ms. Block follows:]

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Mrs. DAVIS OF VIRGINIA. Thank you, Ms. Block.

Mr. Wristen, you will be recognized for 5 minutes.

Mr. WRISTEN. Thank you, Chairwoman Davis, and members of

the committee.

I am Ed Wristen, president and CEO of First Health. First

Health is a premier national health benefits services company and

provides integrated managed care solutions serving the group

health, workers compensation, State agency and Federal Government markets.

First Health has been a provider of managed care services in

FEHBP since 1985. Since July 2002, First Health has served as the

plan administrator, underwriter, managed care service provider

and PBM, fully integrating all those functions for the second largest plan in the program, Mail Handlers Benefit Plan. We appreciate this opportunity to present testimony on H.R. 3751.

As a company that strives to remain at the cutting edge in providing quality health care options, we believe we can offer valuable

perspective and assistance in this matter.

What are the current options for dental and vision benefits? We

would like to emphasize that Federal employees currently have

dental and vision benefits available to them for many plans participating in FEHBP. Currently, there are 12 fee for service plans, 6

open to all Federal employees and 6 closed plans limited to employees of specific agencies. Approximately 70 percent of all FEHBP

members are in these 12 plans. Five of those six open fee for service plans and three of the six closed fee for service plans have dental benefits included in their FEHBP offerings. The remaining 30

percent of FEHBP enrollees are in some 210 comprehensive, or

HMO plans, some of which offer dental coverage in the FEHBP

benefit packages.

In addition, five open fee for service plans with dental also offer

supplemental dental plans to their members at 100 percent member cost that augment FEHBP offerings, and three offer supplemental vision plans.

Finally, four of the six closed plans offer supplemental dental

and vision, and in addition many of the HMOs in FEHBP offer supplemental dental or vision benefits.

The benefit issue OPM is to study is not one characterized by

lack of availability. Numerous options already exist for Federal employees to obtain dental and vision benefits. The issue that merits

attention is how the delivery of these benefits can best be enhanced

while maintaining a strong and viable FEHBP.

How can the existing structure be enhanced? Obviously, what

would be most attractive to Federal employees is the enhancement

of dental benefits and the addition of vision benefits to current

FEHBP offerings. If this were done, the Federal Government would

shoulder most of the increased cost. However, budgetary constraints impacting FEHBP since the early 1980’s have served to

limit virtually any benefit increases, especially those for dental or

vision benefits. We do not see these constraints changing substantially in the current environment, although some relaxation of this

situation would be warranted and welcome.

What OPM has done to address budgetary constraints is arguably a reasonable approach: They have allocated scarce government

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contribution dollars to preserve medical benefits rather than permitting benefit increases for dental benefits or the addition of vision benefits existing in FEHBP plans since 1987. Thus the dental

benefit offerings with FEHBP have been in effect at 1987 levels.

This has led to the state of affairs where they are considered inadequate by 2004 standards.

What about supplemental plans? Many of the FEHBP plans offer

various supplemental dental plans to compensate for the FEHBP

dental coverage occasioned by the freeze. This has been done with

OPM’s knowledge, encouragement, and assistance. OPM allows

FEHBP carriers to use their official plan brochure to announce the

availability of non-FEHBP offerings, such as dental and vision supplements, and permits FEHBP to discuss the offerings at health

fairs. These dental and vision supplemental offerings have become

part of these FEHBP plans’ total offerings to Federal employees.

Why is the government carve-out for dental and vision not a solution? Introducing a new carved-out dental or vision benefit plan

will upset the current competitive balance in FEHBP which has

served the government and Federal employees since inception in

1960, and it will do so without any discernible benefit as these benefits are already available. There is no magic bullet of cost savings

or quality of benefit gains. Instead, doing so by creating an additional subcontracting system would add cost and complexity where

there already exists a system and experienced carriers providing

dental and vision benefits. The existing system can handle any enhancements that Congress or OPM desire to see made in dental or

vision benefits. And with minor adjustments, they are currently offering benefits to the broad health care needs of Federal employees.

Why is the long-term care program not a model? The issue at the

heart of this bill doesn’t require a new contracting system like created for long-term care. That offering was an entirely new benefits

program. Dental and vision have been an integral part of FEHBP

for years. We already have the infrastructure in FEHBP, and using

the current FEHBP and its carriers will preserve the competitive

environment. The system of balanced competition is a model for

private sector and Medicare reform. It shouldn’t be tampered with.

Any new resources by the Congress or OPM should be used to enhance the existing program.

Chairwoman Davis and members of the committee, thank you

again for this opportunity to share our views. I hope that my testimony helps clarify some of the issues associated with the delivery

of dental and vision benefits, and would welcome the opportunity

to further work with you and your committee as you examine those

issues.

[The prepared statement of Mr. Wristen follows:]

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Mrs. DAVIS OF VIRGINIA. Thank you, Mr. Wristen.

I would now like to recognize Dr. Stan Shapiro. Thank you for

being with us today, and you may proceed with your statement.

You are recognized for 5 minutes.

Dr. SHAPIRO. Chairwoman Davis and members of the subcommittee, my name is Dr. Stanley Shapiro, and for more than 33 years

I have been privileged to provide dental benefits, both as a practicing dentist as well as an executive officer of one of America’s leading dental benefits companies. I am grateful for this opportunity to

speak with you today in support of H.R. 3751, which may potentially lead to expanding Federal employee health care benefits to

include voluntary dental and vision plans.

Our Nation has made great strides in educating Americans about

the importance of oral health, and there is a growing recognition

that oral health is integral to general health. New products, therapies, and technologies have enabled people to retain their natural

teeth throughout their lives, thereby enhancing their health and

well-being. Today, the percentage of Americans who receive dental

care is higher than ever before, and I believe this has occurred as

a result of third party funding through government programs for

the underserved and private dental coverage offered in the workplace. Statistics indicate that 54 percent of all Americans currently

have dental coverage, yet throughout my career I have witnessed

the role that cost has played as a barrier to accessing dental care.

This is unfortunate since it is well established that dental disease

is preventable, and children who receive routine preventive care

have the opportunity to live their lives free from dental cares and

periodontal disease. Oral Health in America, a report of the Surgeon General in the year 2000, stated that children from families

without dental insurance are three times more likely to have dental needs than children who come from families with dental insurance.

The FEHBP is a successful model for demonstrating the purchasing leverage of the Federal Government and the ability to provide

choice among the types of plans offered. But while some of these

medical plans include dental and vision benefits, they are difficult

to evaluate and typically provide very low levels of coverage when

compared to the wide array of plans that are readily available in

both the public and private sectors.

To demonstrate this point, we have evaluated 150 FEHBP medical plans to define the levels of dental benefits coverage. Out of 150

plans, only 1 provided preventive dental care for children. Out of

150 plans, only 14 offered orthodontic coverage. Furthermore, reimbursement levels and annual maximum benefits were limited.

Similar results occur for vision benefits, creating a confusing basis

for FEHBP participants to evaluate the cost of high option medical

plans against the actual benefits received. All too often there are

failed expectations, and the perception is that dental and vision

benefits offered by FEHBP are inadequate and disappointing. This

is exacerbated by the escalating costs and structural changes in

health plans that Federal employees encounter when selecting the

appropriate medical coverage for their families. The FEHBP acknowledges the low dental benefits levels and communicates this

fact on its Web site to Federal employees. It responds to a freVerDate 11-MAY-2000 10:52 Aug 16, 2004 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 D:\DOCS\95156.TXT HGOVREF1 PsN: HGOVREF1
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quently asked question, by stating, ‘‘Everyone wants to keep premium increases as low as possible, so generally, to increase benefits plans make tradeoffs. We would not want to sacrifice medical

benefits to get dental or vision benefits.’’

In contrast, employees of 48 State governments have voluntary

dental benefits, and 44 of those are stand-alone plans that offer

benefits which are superior to those included in the FEHBP medical plans. In my home State of Florida, for instance, State employees may select from eight different stand-alone dental plans, and

more than 50 percent of employees currently participate in one of

the plans. For the past 3 years, and despite rising medical costs,

enrollment in the voluntary dental plans in Florida has increased

as a percentage of the work force from 49 percent in 2001 to 55

percent in 2003. The same trends hold true for the voluntary vision

plan. In the private sector, dental plans are both varied and affordable. Of the three most popular plan types that include orthodontic

coverage, the average monthly premium for an employee is $14.10

for a dental HMO, $22.07 a month for a dental PPO, and $28.20

for a full indemnity plan. An employee can cover his or her spouse

and children through a dental HMO for an average monthly premium of only $36.35. Once enrolled in the plan, there are typically

no deductibles or annual maximums, no charges for preventive

care, minimal direct cost for restorative care, savings of up to 50

percent on major services, and reductions of 25 to 50 percent in the

cost of orthodontic treatment. It is no surprise that employees appreciate this purchasing leverage and utilize dental plans to facilitate their access to care.

Employers have learned that dental benefits are an important

component of employee benefit programs. Surveys indicate that 95

percent of employers with 500 or more employees provide dental

benefits as well as 48 of the 50 State governments and thousands

of county, city, and municipal government and school districts.

In the competition for quality employees, voluntary dental and

vision benefits fulfill employee expectations and create a competitive advantage for any employer. With the largest work force in

America, the Federal Government can establish without cost a

more comprehensive ancillary benefits program that will enhance

the oral and general health of Federal employees and be perceived

with value by all participants.

To that end, I urge you to support H.R. 3751. Thank you very

much.

[The prepared statement of Dr. Shapiro follows:]

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Mrs. DAVIS OF VIRGINIA. Thank you, Dr. Shapiro.

I now would like to recognize Mr. Seltenheim. You are recognized

for 5 minutes.

Mr. SELTENHEIM. Good afternoon, Chairwoman Davis, Ranking

Member Danny Davis, and members of the subcommittee. Thank

you for the opportunity to testify before the subcommittee on providing stand-alone dental benefits to Federal employees. My name

is Jon Seltenheim, and I am chairman of the Board of Directors of

the National Association of Dental Plans.

NADP represents the vast majority of regional and national companies that offer dental benefits. I testify today supporting H.R.

3751. NADP believes OPM will conclude as we have that FEHBP

should provide dental benefits in the same excellent manner they

provide medical insurance coverage to Federal employees, their

families, and retirees. However, unlike the majority of private sector programs, FEHBP provides little in the way of dental coverage.

The first portion of my testimony points out the value of dental

coverage. And this is not simply anecdotal, but comes from Federal

Government reports, empirical data, claims data from our member

companies, and reports generated from impartial research institutes.

The landmark 2000 Surgeon General Report, ‘‘Oral Health in

America,’’ has as its primary theme ‘‘Oral health is integral to general health.’’ This report documented that the two primary dental

diseases, caries and periodontal disease, are still common and

widespread despite safe and effective measures to prevent them.

The report goes on to document that the primary barrier to dental

care is cost, and the existence of dental benefits helps to overcome

this barrier and provide access to care.

Beyond cost, research continues to show that the potential association of dental disease, especially advanced periodontal conditions, with coronary heart disease, has an association with coronary heart disease, stroke, and low-weight premature babies. Dental disease does have broader health and financial impacts which

must be considered in reviewing the value of dental benefits.

In the 2000 report of the Surgeon General, the estimate was that

108 million Americans did not have access to a dental benefit,

about two and a half times the uninsured medical population. The

report also noted that 70 percent of individuals with private dental

insurance reported seeing a dentist in the past year, while 50 percent of those without dental benefits did, a 120 percent difference.

So you can clearly see that dental benefits facilitate people going

to the dentist. And as the report notes, preventive care is essential

to keeping down overall dental and medical costs, because early detection of other diseases can be found through oral checkups, especially things like oral cancer.

The National Institute of Dental and Craniofacial Research estimates that for every dollar spent on dental disease and prevention,

$4 is saved in subsequent treatment costs. Therefore, promoting access to dental care is essential to keeping up our Nation’s oral and

general health.

Based on the 2003 NADP/DDPA dental benefits report, enrollment is conservatively estimated in the year 2002 to be 154 million

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Americans, or about 54 percent of the population have dental coverage. This is a 63 percent increase from the 1989 HHS report.

The products that comprise the market have changed over time

with the most recent growth being in the PPO market and discount

dental segments. The most accurate look at what U.S. employers

provide in terms of dental benefits is the Mercer Survey of Employer Sponsored Health Plans. This 2003 report found that 66 percent of all employers provided dental, 96 percent of employers with

more than 500 employees, and 98 percent of large employers, those

with over 20,000 employees, provided a dental benefit. For county,

city, and State government entities, the survey revealed that 95

percent of government employers with more than 500 employees offered dental benefits, with a median deductible and maximums of

$50 and $1,000 respectively. This would indicate that most are offering comprehensive fee-for-service programs. This is significant

as it definitively illustrates that FEHBP is out of step in this arena

with similarly situated large employers, whether private or governmental.

In conclusion, the study requested of OPM is timely and important to the oral and physical health of Federal employees. NADP

believes that offering a dental benefit to Federal employees will not

only provide a valued dental benefit from the employee’s perspective, but will also serve to provide a benefit package that is more

competitive with other governmental, commercial and military offerings. NADP stands willing to provide additional detail in these

and other areas of investigation by OPM in response to the study

requested by H.R. 3751.

[The prepared statement of Mr. Seltenheim follows:]

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Mrs. DAVIS OF VIRGINIA. Thank you, Mr. Seltenheim.

Dr. Braverman, if you will bear with us for a moment. We have

been very blessed to have our chairman of our full committee

Chairman Tom Davis join us, and he is no stranger to caring about

our Federal employees. And Chairman Davis, you are recognized

for an opening statement.

Chairman TOM DAVIS. Well, first of all, thank you very much for

being with us, and thank you, Madam Chairwoman and the other

members. I think you can see the level of interest here on the subcommittee and full committee in trying to move this ahead.

FEHBP I think is a great program, but it’s not going to remain

a model for excellence in employer-provided health care coverage

unless we continue to explore avenues to enhance the care and

choice provided, And I would ask to put my entire statement in the

record if that will be OK.

Mrs. DAVIS OF VIRGINIA. Without objection.

[The prepared statement of Chairman Tom Davis follows:]

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Chairman TOM DAVIS. But we appreciate you being here today,

and I think we would like to move ahead on this if we can. But

see how the hearing goes, and maybe we can proceed to markup

in the next few weeks. Thank you for your leadership.

Mrs. DAVIS OF VIRGINIA. Thank you, Mr. Chairman.

Dr. Braverman, thank you so much for being patient, and now

we will recognize you for 5 minutes.

Dr. BRAVERMAN. Thank you.

Chairwoman Davis and Chairman Davis and members of the

subcommittee, I am Howard Braverman, past president of the

American Optometric Association. Currently, I am chairman of the

AOA’s Industrial Relations Committee and I am proud today to

represent the American Optometric Association on this most important issue that’s before you.

The AOA is a national organization that represents more than

30,000 doctors of optometry, educators, and students. We are dedicated to improving the visual health of the public, and appreciate

the opportunity to be here today to discuss the important issue of

vision care in the Federal work force.

AOA fully supports the intent of H.R. 3751 to require the Office

of Personnel Management to study the issue of vision and dental

benefits, and also to recommend to Congress how these can best be

offered to all Federal employees. This is not only an important benefit, but an important health care issue, one that can enhance both

employees’ quality of life and their efficiency and job performance

in the workplace. We commend you for your leadership on this

issue.

In my remarks today, I will outline for you the need Americans,

especially those of working age, have for routine vision care as well

as the extent to which employees desire a vision benefit.

The U.S. Department of Health and Human Services estimates

that 64 percent—that’s 64 percent of the work force older than

17—need some form of visual correction. But in addition to the

work force, we are really talking about 160 million Americans who

need eyeglasses or contact lenses. And the sad truth is that fewer

than 93 million get regular vision health care.

Today, vision care has become a valuable benefit not only to employees but also to their employers. There are a number of factors

that are influencing that realization to both employer and employee. The first is presbyopia. In the aging work force it is the No.

1 reason why employees today are seeking a vision benefit that not

only includes a comprehensive eye health examination but glasses

or contact lenses at a reasonable cost, for by age 40 people start

to experience a visual loss in the ability to read due to the aging

process.

The second reason is that computers in the workplace have now

caused a new syndrome called computer vision syndrome [CVS].

Workers who spend considerable time at computers are significantly at risk for this syndrome that causes headaches, dry eyes,

and other related problems. The ability to have regular eye health

examinations and glasses at a reasonable cost can go a long way

to combat this problem.

Employees today have realized that eye health care is a must for

their families. Mothers and fathers have learned that if their chilVerDate 11-MAY-2000 10:52 Aug 16, 2004 Jkt 000000 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 D:\DOCS\95156.TXT HGOVREF1 PsN: HGOVREF1
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dren can’t see then they can’t learn. And today, the State of Kentucky requires children to have a comprehensive eye health examination, not just a screening, prior to entering public school. However, whether it’s required or not, parents are realizing that it’s

most important to have their children’s eyes examined prior to entering school. A voluntary vision benefit would be a great help to

employees to pay for their families’ regular eye health care and

glasses or contact lenses.

Routine eye examinations provide an opportunity for early detection of potentially life threatening health problems, such as high

blood pressure, arteriolosclerosis, and diabetes, diseases which, if

they are not detected early, can result in major and expensive complications. There are many other serious conditions that can be

identified through eye health examinations. They include glaucoma, cataracts, and macular degeneration, and of course diabetic

retinopathy. Early treatment of these conditions is the key to

avoiding serious or total vision loss.

Our senior citizens and our retirees have a great need for vision

care, but only 16 percent have vision benefits. Forty percent of

America’s senior citizens report that the cost of routine eye examinations is just prohibitive. A recent Family and Work Institute

study also found vision care to be one of the chief benefits that employees seek. In this study, vision benefits ranked second among

nearly 40 optional benefits as the program for which they were

willing to trade an existing benefit. In response to this demand, vision care benefit plans are more and more becoming one of the

tools employers use to compete for talented employees.

For these reasons, and because people wear glasses and/or contact lenses for cosmetic reasons, a voluntary vision benefit for Federal employees will help control costs of these health requirements.

The cost of a vision plan is low, about 3 percent of the cost of a

medical premium. On average, American employees and their families would pay between $8 and $10 per month for their vision benefit. The premium is not so high that workers do not find it an attractive addition to their benefits portfolio.

The American Optometric Association supports regular eye examinations for everyone, and strongly endorses a voluntary benefit

for Federal employees. We would be pleased to be of service in

helping to point out the important considerations for selecting a vision plan. Improved access to eye care is an important component

in any comprehensive health care strategy.

Before closing, I would like to also urge the subcommittee to favorably consider another piece of legislation, H.R. 3268, introduced

by Congressman Cummings. H.R. 3268 would extend the same

glaucoma screening coverage provided today by Medicare to Federal employees who are in high risk populations. This is a simple

yet important step in the early detection and treatment of this debilitating disease. Caught early enough, glaucoma can be managed

and serious damage, which can include blindness, can be prevented. The long-term savings both to society and to individuals

whose quality of life will be preserved as a result of these

screenings is well worth the modest investment to the program.

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Thank you again for the opportunity to appear before this subcommittee, and I will of course be happy to answer any questions.

[The prepared statement of Dr. Braverman follows:]

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Mrs. DAVIS OF VIRGINIA. Thank you, Dr. Braverman, and thank

you to all of our witnesses.

I would like to now move into the question-and-answer period,

and I would like to yield to our Civil Service Subcommittee ranking

member, Danny Davis. Mr. Davis, you have the floor.

Mr. DAVIS OF ILLINOIS. Thank you very much, Madam Chairwoman, and this is a question perhaps we could each respond to.

Oftentimes when we start talking about dental health and the provision, there is a perception that it is too costly to provide. How do

you respond to that perception?

Mr. SELTENHEIM. On a percentage basis of cost versus the medical premium, it’s about 8 to 10 percent of the total medical premium that we see today. So we would say that it’s an excellent

benefit in relation to cost.

Dr. SHAPIRO. I would add, sir, that in the marketplace today

there are such a wide variety of plans that if they were offered in

a balanced program where this variety were added people could access the plan that best suited their individual needs. And as I indicated in my testimony, the price of some of these plans is very

modest. You can then select the plan that is best structured to help

you accomplish the types of cost savings you need to access your

dental care.

Mr. DAVIS OF ILLINOIS. Would you have any recommendations in

terms of cost sharing? That is, any part or percentage the employer

should pay with the employee paying the rest.

Dr. SHAPIRO. My experience over my career of 25 plus years in

this industry is that every employer views it in a different way. I

will tell you, however, that in purely voluntary plans where there

is no cost sharing, there is still a very high demand by employees.

As the cost sharing goes up, of course then those numbers go up

as well.

Mr. SELTENHEIM. And I would add that, you know, you can start

with no contribution, you can then move to some employer contribution. And typically what the larger Fortune 500 firms are

doing today is they are simply giving health credits that go toward

medical and dental, so the employee has the choice as to the combination of medical and dental plans that they would choose to pursue based off of what their individual benefit needs are. So a family

is going to have different types of benefit needs than an older couple or a single, so many employers are going to benefit credits and

using that as a way of allowing the choice to be the employee’s.

Mr. DAVIS OF ILLINOIS. Are we familiar with any research which

delineates how important individuals feel that vision care is, how

people feel about their vision, and the extent to which it should be

taken care of?

Dr. BRAVERMAN. I can’t speak to any particular plan, but I would

be happy to supply the committee with the American Optometric

Association studies that have shown how important vision care is

and the advantages of having a voluntary vision plan. For example,

the average cost of an eye examination and eyeglasses is well over

$300. We are just looking at the premium for a stand-alone voluntary vision plan, it is one-third of that. So certainly we would be

happy to supply you with that type of information, sir.

Mr. DAVIS OF ILLINOIS. Thank you very much.

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I have no further questions, Madam Chairwoman.

Mrs. DAVIS OF VIRGINIA. Thank you, Mr. Davis.

Ms. Block, what is OPM’s view of the adequacy of our current

FEHBP dental and vision benefits, and how does it compare with

the private sector?

Ms. BLOCK. Well, I don’t have extensive data. My understanding

is that there is a very broad range of what’s actually offered in the

private sector. So there is not a single model out there that one

could compare us to. Without doubt, as has been said, we have established certain priorities in the FEHB Program, and those priorities have been in place for a number of years. And we work very,

very hard, and under the guidance of Director James, as you know,

we have worked particularly hard in the last few years to keep our

premium increases below the national average and affordable for

Federal employees and retirees.

Mrs. DAVIS OF VIRGINIA. Let me interrupt you.

Ms. BLOCK. And so there is a tradeoff involved.

Mrs. DAVIS OF VIRGINIA. Let me interrupt you right there. You

said that those benefits have been in place for many, many years.

Why hasn’t OPM allowed any increases in the benefits since 1987?

Ms. BLOCK. Because to have allowed those increases without reducing medical benefits would have caused even greater premium

increases than we have faced.

Mrs. DAVIS OF VIRGINIA. Does the administration have a position

on providing an increase in dental and vision benefits for the Federal employees?

Ms. BLOCK. The administration does not have a position as yet

on that issue.

Mrs. DAVIS OF VIRGINIA. When do you expect them to have a position on what I consider to be a very important issue?

Ms. BLOCK. I don’t have a specific timeframe. But given the introduction of your bill, we are clearly looking at it.

Mrs. DAVIS OF VIRGINIA. What kind of a plan do you think that

the Federal employees would probably take most advantage of? A

stand-alone or what? Do you know?

Ms. BLOCK. I think that all of the issues that have been raised

both by members of the subcommittee and the members of the

panel are exactly the kind of issues that we would have to consider

were we to do the study proposed under H.R. 3751. So I don’t have

an opinion at this time. Those are exactly the right issues to look

at.

Mrs. DAVIS OF VIRGINIA. Is it possible to increase, in your opinion, the dental and vision benefits within FEHBP without expending any additional Federal money by reducing other rarely used

health benefits currently offered by some of the plans? Assuming

there are some pretty rare benefits that aren’t used.

Ms. BLOCK. Well, there really aren’t any rare benefits that aren’t

used. There is some group of people somewhere that are using

every single benefit that is available now. The rate at which people

use benefits of course varies, but the nature of the benefit dictates

that certainly fewer people go to the hospital than visit the doctor;

but we surely wouldn’t want to reduce hospital benefits because

that’s the case. So we have carefully balanced the benefits with the

help of our partners, the insurance carriers, over the years to try

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to provide as good a balance of comprehensive benefits as we believe is affordable for our Federal employees and retirees.

Mrs. DAVIS OF VIRGINIA. What if you had an enrollee paid standalone package as opposed to an increase in the dental/vision benefits within the FEHBP? Do you think that would provide the best

opportunities to select coverage suited to the needs of a particular

employee and her family if it were an employee-paid stand-alone?

Ms. BLOCK. That would be one of the things we would have to

look at as we study the issue more carefully toward evolving an administration position. I don’t have a position at this time.

Mrs. DAVIS OF VIRGINIA. Do you think that offering a stand-alone

dental/vision plan would result in damage to the current competitive foundation of the FEHBP, since current FEHBP health plans

can distinguish themselves by combining supplemental dental policies with their health benefit plan?

Ms. BLOCK. I had not thought of it in that context, but it would

certainly be something in the course of a study that we would want

to discuss with the participating carriers in the FEHB program.

Mrs. DAVIS OF VIRGINIA. And just to clarify one thing, you said

you are not allowed to give us recommendations? Is that what you

said?

Ms. BLOCK. Yes. I believe that is the position of the Department

of Justice that the legislative branch cannot require the executive

branch to provide recommendations.

Mrs. DAVIS OF VIRGINIA. Thank you very much, Ms. Block.

Ms. Holmes Norton.

Ms. NORTON. I don’t know if this is the park police case or not

sprouting forward, Ms. Block, but my sympathy is with you. How

many—approximately what percentage of employees have some

dental health through FEHBP?

Ms. BLOCK. I think that depends on whether you consider what’s

available within the FEHBP plans, per se, or as Mr. Wristen mentioned in his statement, the various supplemental plans that are

available.

Ms. NORTON. Give me both.

Ms. BLOCK. If you include the ones that have some supplemental

benefit and/or an FEHBP benefit available, you are probably looking at close to 70 percent of the employees in the program. I don’t

have the exact number off the top of my head.

Ms. NORTON. So would you therefore characterize this as less a

matter of access than of cost, since it looks like a great many have

some form of dental insurance?

Ms. BLOCK. I think it’s a question of how people view access, how

or where they are, or what’s available to them through the various

plans, and what their expectations are.

Ms. NORTON. Would most of these—I note, for example, in Mr.

Wristen’s testimony—and I’m quoting here at page 2, the five open

fee for service plans offer supplemental dental benefit plans to

members at 100 percent of member cost. All of those supplemental

plans would be at 100 percent of member cost. Now, it’s hard for

me to get around what you have done because it’s hard for me to

say that you have made an incorrect judgment in assuming that

simply adding dental could be done without some kind of tradeoff,

unless the Federal Government were willing to step up somehow

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with a greater amount of money. Let me ask you this. Given your

experience—and don’t tell me you haven’t done a survey, I understand that. Do you believe employees would rather have a greater

contribution to their FEHBP plan, greater than 70 percent or whatever it is, if they were given that choice as opposed to dental and

vision additions to their plan?

Ms. BLOCK. Ms. Norton, I truly am in no position to answer that

question. I simply don’t know the answer. I can’t speak for Federal

employees as a group.

Ms. NORTON. That’s something—you know what? I don’t know

why FEHBP wouldn’t at least—since 1987 have wanted to find out

what employee preferences are. It seems to me that you ought to

be doing that every few years anyway. Could I ask that you do

that, to find out what their preferences are without promising to

do anything, which are you not in a position to do anyway?

Ms. BLOCK. Well, I’m not in a position to promise that we could

do such a survey, but it’s certainly something that we could consider.

Ms. NORTON. Let me enter this notion about a wholly different

infrastructure. Clearly, if an employee wants to pay for it, they can

get dental, some dental. Now, are most of these plans—what we

are accustomed to hearing is that these companies will pay for an

itsy bitsy amount of what the dental work costs. I’m not sure about

vision work. Are most of these 70 percent employees getting fairly

minimal benefit in costs toward their dental work out of these

plans?

Ms. BLOCK. I think each plan has a different structure, so I can’t

really generalize for all of them. Clearly, always, as with the

FEHBP in general, premiums have to cover the cost of providing

the benefit. That’s always the issue. You always need to be sure

that you have enough revenue to provide the services that you are

contracting to provide. And that’s why I don’t know the answer. We

don’t get involved in any way with the non-FEHBP dental offerings, so I don’t know data on them.

Ms. NORTON. What about the FEHBP dental offerings? Is that

minimal? Tell me what you do know, Ms. Block.

Ms. BLOCK. The FEHBP, the current FEHBP offerings are typically a fee schedule, and that fee schedule has not increased in recent years.

Ms. NORTON. So that’s what makes the amount so low that the

employee can get?

Ms. BLOCK. And that’s typical. There are exceptions to that. I

mean, some of the HMOs actually provide services, for example. So

again, because we have so many choices in the FEHB Program,

there is no single structure or benefit pattern that I can say is typical of all of the FEHBP.

Ms. NORTON. What I’m confused about, and perhaps you, Ms.

Block, perhaps the other panelists, can help me out on, is the notion of a stand-alone plan. I mean, why would we want an entirely

new infrastructure that somebody has to pay for? That’s what we

have now. We have thousands of insurance companies, and that’s

where all our money goes. Our money doesn’t go to health care, it

goes to keep health care plans running. So once somebody tells me

that we need another stand-alone something, I want to know more

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about what you mean by a stand-alone plan, why whatever we are

talking about couldn’t just be part of FEHBP. That stands right

there. Why couldn’t we just incorporate it in there? What is to be

gained by a wholly new infrastructure for some of the health care

we would provide our employees?

Ms. BLOCK. Well, since we have not made any proposal in terms

of any approach, I would defer to the other members of the panel

who have addressed this issue.

Mr. SELTENHEIM. In terms of an objective for employees, I think

the value of stand-alone benefits that is not within necessarily the

medical offerings themselves could result in a high reimbursement

rate and less out-of-pocket cost to the actual employees and their

family members. I mean, I think that’s part of the value of doing

a study, is to take a look at what the reimbursement rate levels

are today under some of the various plans and make a determination.

Ms. NORTON. Could you explain why—less cost to employee and

higher reimbursement rate if it’s a stand-alone plan?

Mr. SELTENHEIM. Right.

Ms. NORTON. Would you have several plans all competing with

each other?

Mr. SELTENHEIM. And that’s part of what helps to I think provide

an opportunity. With the opportunity of choice employees can make

a determination as to what benefit level are they seeking, what

type of network do they want to have access to, and they can make

a decision as to potentially what their out-of-pocket costs are. As

of right now, where there are offerings it’s in fact embedded within

medical plans, although there are some supplemental programs

available. I think it’s a matter of offering employees greater choice,

is what it boils down to.

Ms. NORTON. Thank you, Madam Chairwoman.

Mrs. DAVIS OF VIRGINIA. Before I go to Mr. Van Hollen, I just

want to say—I had a town hall meeting recently and talked about

the long-term health care plan, and it is my understanding that it

is strictly with one carrier, and there is no competition. A lot of the

people don’t feel that they have a real choice because there is no

competition.

Ms. NORTON. For FEHBP?

Mrs. DAVIS OF VIRGINIA. For long-term health care insurance.

Ms. NORTON. For our long-term health care? Well, maybe Ms.

Block would want to tell us why they decided on that.

Mrs. DAVIS OF VIRGINIA. That’s another hearing, and we are

going to ask those questions then. But I think that’s the whole——

Ms. NORTON. We didn’t just—we are not doing a monopoly here.

There was a competition, but they competed and this is the guy

who said he would give us the best price.

Mrs. DAVIS OF VIRGINIA. Right. And there are a lot of complaints

because they don’t feel they have a choice now. And that’s why I

think that doing this where you have several different plans and

several different carriers would give Federal employees better options. I don’t know, but we can ask those questions at another

hearing. I don’t want to beat this horse to death.

Mr. SELTENHEIM. Just another thought. It’s not only a matter of

cost and types of plan, but it’s also a matter of access. Who has a

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large network in a particular area that would become attractive to

an employee is something else to factor in.

Mrs. DAVIS OF VIRGINIA. Thank you, Mr. Seltenheim.

Mr. Van Hollen.

Mr. VAN HOLLEN. Thank you, Madam Chairwoman.

I have a question, Ms. Block, just in terms of the administration’s position on this. I realize you don’t yet have a position, we

don’t know exactly when you have will have a position. I don’t

know what the schedule is for moving forward with the markup,

but I hope we will have the benefit of the administration’s views

before that time. I want to make a distinction here because I

wasn’t quite clear what you meant by saying the Attorney General

has taken the position that you are not required to make recommendations based on a request from Congress. It’s one thing to

say you oppose the bill, it’s another thing to take the position that

if the bill passes, because of separation of powers issues you are

still not going to respond because it requires recommendations.

And so what I want to know is if you’re suggesting that the administration is taking the position that even if this bill passes that you

are not required to respond.

Ms. BLOCK. No. I don’t want to be misunderstood. We would be

required to respond. We would certainly do the study, and we

would be pleased to provide options. We simply would not be able

to give recommendations unless the administration chose to do so.

Mr. VAN HOLLEN. OK. So you would——

Ms. BLOCK. I don’t mean in any sense that we would disregard

the provisions of the bill.

Mr. VAN HOLLEN. So you would respond by providing options,

but not say this is our preferred option. Is that it?

Ms. BLOCK. That’s correct.

Mr. VAN HOLLEN. Thank you. Just with respect to the last paragraph of your testimony, you said that, ‘‘OPM has been gathering

information on dental and vision programs so that we can be aware

of the practices of other employees and cognizant of industry

trends. I also would be happy to offer information I have about how

such programs are structurally administered by the industry for

other purposes.’’

Could you give us, based on that review, your conclusions as to

whether you see others in the industry providing greater benefits

and still being able to contain costs in a way that could be a model?

I understand you can’t bless any model that could be a good model

for us.

Ms. BLOCK. Well, that’s exactly what we’ve started from a very

preliminary perspective to look into. And at this point we’re just

asking questions. We have certainly not reached any conclusion. I

have had the good fortune of meeting with some of the members

of the panel, for example, and the organizations that they represent. But it has been strictly in terms of trying to understand

how the industry functions and what the industry offers other employers in terms of structures, plan type, and so on. So we’re at the

very preliminary stages of trying to collect that kind of information,

since up until now we have not offered or thought about a discrete

benefit for dental or vision. This is very preliminary-stage information gathering for us.

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Mr. VAN HOLLEN. OK. Now, I’m not sure I understand exactly

how the FEHBP works in this respect. As I understand it, we put

a freeze on an expansion of dental benefits under FEHBP; is that

right?

Ms. BLOCK. Well, what we have done in terms of the expansion

of any benefit, we have had a tradeoff policy for the expansion of

any benefit in the FEHB Program for a number of years. And

that’s for cost containment purposes. So any time a carrier proposes to increase benefits or add benefits in one area, we look for

a tradeoff that will cover the cost of expanding that benefit from

some other area.

Mr. VAN HOLLEN. Sure. OK. So if a carrier is providing a plan

under FEHBP right now, and they came to you and said, we want

to expand dental benefits in this way and we’re going to reduce

other benefits in that way, they could do that now.

Ms. BLOCK. Well, we would prefer that they wouldn’t. And we

have asked carriers not to do that for a number of years because

we have made the determination that, as valuable as we believe

dental and vision benefits to be—and I don’t want to at all give the

impression that we don’t understand the importance of those benefits, indeed we do, as we understand the importance of other benefits that our employees have expressed an interest in—we have

simply made the determination that things like hospital care, physician care, maternity care——

Mr. VAN HOLLEN. If I might ask you——

Ms. BLOCK [continuing]. Are our priorities and those are the

things that we need to prioritize.

Mr. VAN HOLLEN. Yes, I understand that. And that may well be

my choice. And I don’t know how FEHBP works completely, but my

understanding—let’s say a carrier was given that choice, and they

did increase dental benefits and they reduced benefits somewhere

else; isn’t the ultimate choice left to the consumer?

Wouldn’t that mean that they had—why would they do that if

they didn’t think more people were going to sign up? And if they

did think more people were going to sign up, why don’t you let

them take the risk in making that determination rather than deciding for them?

Ms. BLOCK. There are other considerations that have to be

weighed, considerations that have to do with anti-selection, for example. If one carrier offers a benefit that is typically used by otherwise low-utilizing members and drops a benefit that is typically

very expensive, therefore discouraging enrollment in that plan by

high-utilizing members, you get into a very dangerous anti-selection situation. And that’s another part of the equation that we have

to consider.

Mr. VAN HOLLEN. Thank you. Thank you very much.

Thank you, Madam Chairwoman.

Mrs. DAVIS OF VIRGINIA. Thank you, Mr. Van Hollen.

I enjoyed hearing the exchange on that and I guess I’m not real

sure what you just explained, because I sort of liked what Mr. Van

Hollen said, because when I came on board and saw the brochure

on all these different plans, I mean, there were a gazillion choices.

So why not, if we had a carrier that wanted to offer more dental,

why not give the employee that choice?

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The other thing that I thought was—my legal counsel was trying

to explain it to me—in your responses several times, you said you

have done it to keep the cost down. Boy, do I hear from my constituents how they get a little bit of a raise and their cost goes up

47, 48 percent on their health insurance. So I’m not sure I follow

that line item. Maybe you can explain it to me later.

I want to thank all the witnesses for coming. We probably will

have some questions for you for the record if we can submit them

to you in writing and have you respond. And we will make sure

that our members all have that same opportunity.

I’d like to again thank all of you for coming. I do think this is

a very important issue and one that we hear about a lot from our

Federal workers. Dental and vision plans are very important to

them. So I’m certainly hoping that if we can get this bill passed,

that we can get a study from OPM and maybe do something to help

our employees from here on out. But thank you all very much for

coming.

With that, the hearing is adjourned.

[Whereupon, at 4:15 p.m., the subcommittee was adjourned.]

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