While overall health premiums for federal employees will increase an average of 8.5 percent next year, employees' share of of the premiums will go up an average of 15 percent--and some employees will see their premiums rise by as much as 75 percent.
The government pays an average of 72 percent of the total cost of premiums under the Federal Employees Health benefits Program (FEHBP). The remainder is paid by employees.
Rep. John Mica, R-Fla., chairman of the House Government Reform and Oversight Committee Subcommittee on the Civil Service, held a hearing last week to look at ways to keep employees' health care costs down. Mica said the 8.5 percent average increase in premiums under the Federal Employees Health Benefits Program (FEHBP) announced by the Office of Personnel Management in September is a misleading figure.
"The average rates mask wide variations in individual plan experiences," Mica said. "Federal employees and federal retirees depend upon the FEHBP to provide them and their families with options for high-quality health care at reasonable prices. But they do not pay 'average' premiums. Their bills are determined by the premiums of particular plans."
For example, under one plan, employees enrolled in a family program will pay $147.59 every two weeks, up from $80.17. Under a different plan, employees enrolled in a family program will pay $20 less every two weeks than they do this year. Meanwhile, employees enrolled in several plans will pay the same premiums they pay this year. (For complete information on 1998 health rates for all FEHBP plans, click here.)
William Flynn, associate director for retirement and insurance at OPM, testified before Mica's committee that medical costs are rising at an annual rate of about 7 percent. Flynn said FEHBP premiums will be lower than private-sector premiums next year, but the rising costs of health care forced health care premiums up.
Flynn also noted that the FEHBP's roughly 350 insurance carriers provide federal employees with a wide range of choices for health care coverage.
"The annual competition for participants helps to keep premiums competitive," he said.
Joseph Antos, assistant director for health and human resources at the Congressional Budget Office, said consumers are becoming more demanding of their health insurance providers.
"A key force instilling competition in the marketplace has been their willingness to change health plans to obtain lower premiums," Antos said.
He said also that differences in local insurance markets contribute to fluctuations in health care premiums. For example, premiums for the three local FEHBP plans in California with the largest family enrollments will increase no more than 5 percent, while premiums for the three plans in Washington, D.C. with the largest family enrollments will increase by more than 10 percent.
But Antos, like Flynn, said that rising health care costs will probably translate into higher health insurance costs over the next few years.
NEXT STORY: White House Office in Spotlight