Health premiums rise even higher than expected

Health insurance premiums under the Federal Employees Health Benefits Program will increase even higher than anticipated next year, an average of 10.5 percent, according to the Office of Personnel Management.

FEHBP provides coverage for 9 million federal employees, retirees and their families. Premiums rose an average of 9.3 percent for the year 2000. 1999 saw an increase of 9.5 percent.

In June, OPM said it expected premiums to increase an average of 8.7 percent for fiscal 2001. But Friday, the agency announced even higher figures. Premiums for Health Maintenance Organizations (HMOs) will increase an average of 8.5 percent, while fee-for-service plans will see an average increase of 10.9 percent. The overall average increase will be 10.5 percent. New premiums go into effect in January.

"Premiums are rising at unacceptable rates," said OPM Director Janice R. Lachance. Costly prescription drugs are the primary contributor to the rate hike. Escalating drug prices accounted for 40 percent of the total premium increase.

In addition, 35 HMOs will drop out of FEHBP next year, leaving about 54,000 employees to select new health plans. Drop-outs must notify their members that the need to select a new plan during FEHBP open season, which runs from Nov. 13 to Dec. 11 this year. The number of HMOs offering health insurance to federal employees and retirees declined from 476 in 1996 to 277 in 2000.

OPM was quick to point out that health care costs are rising nationwide. Various health care consultants, associations and research groups report anticipated increases next year from 12 percent to 24 percent. "OPM's increases are lower than those seen by some large organizations, but they reflect nationwide trends," said Lachance.

Earlier this week OPM called off a planned two-year pilot program with the Department of Veterans Affairs to lower prescription drug prices. Under the pilot OPM was to allow the Special Agents Mutual Benefit Association access to purchase prescription drugs off the Federal Supply Schedule at a statutory discount of 24 percent. The pharmaceutical industry's three biggest manufacturers opposed the pilot and eventually sunk the plan by refusing to fill orders.

FEHBP participants who have self-only coverage will pay about $3.50 more biweekly next year. Family coverage will cost about $9.00 more biweekly.

Average Biweekly Premiums
2001 2000
Self-only $36.52 $33.00
Family $80.16 $71.22
Source: Office of Personnel Management

2001 premium rates are available online at

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.


When you download a report, your information may be shared with the underwriters of that document.