President Vetoes Changes in Federal Health Benefits

President Reagan Friday vetoed a bill that would have made changes in health benefits for federal employees, saying it would increase the federal deficit by eliminating a 75% ceiling on the government’s share of health care premiums.

Reagan said the bill contained desirable features, including a provision allowing retired federal workers, like those still working, to be paid rebates in health insurance premiums by their insurance carriers.

But, the President said, eliminating the ceiling on the government’s share of premiums “would add to government costs and increase the federal budget deficit at the very time that there is a critical need for fiscal restraint.”

Cuts in Spending

Reagan said spending for most government programs will have to be cut in order to comply with the balanced-budget law enacted by Congress last year.

“Under those circumstances, this is not the time to raise the government’s personnel costs,” he said.

The President said the Office of Management and Budget estimated that the bill, by shifting part of the cost of premiums from employees to the government, would add $90 million to the deficit in the current fiscal year and $173 million in the year beginning Oct. 1.

From 1986 through 1991, the period during which the balanced-budget law aims to eliminate the federal deficit, the health care bill would increase the deficit by an estimated $1.2 billion, he said.

Reagan Cites Savings

A bill proposed by the Administration would also have eliminated the ceiling but combined this with changes in the way the government’s contribution is established. Reagan said this would have saved money for both employees and the government.

The bill passed by Congress, he said, “ignores that essential linkage by simply lifting the cap without program reform, resulting in an unacceptable shift in costs from employees to the government.”

“I look forward to working with the Congress early in the session to develop a suitable package of structural reforms that would include lifting the cap,” the President said.