House panel laments health premium hikes

In what has become an annual event, the House Government Reform Subcommittee on the Civil Service Tuesday held a hearing at which members of Congress and representatives of federal unions, the Office of Personnel Management and outside groups complained about the rising costs of health care coverage under the Federal Employees Health Benefits Program (FEHBP). OPM officials announced last month that health insurance premiums for federal employees and retirees would rise an average of 13.3 percent in 2002, the biggest increase since the 1980s. Premiums have jumped nearly 50 percent over the last four years. At the first hearing of the civil service panel under its new chairman, Rep. Dave Weldon, R-Fla., witnesses and members of Congress rehashed observations, complaints and proposals for reform discussed at similar hearings in September 1998, May 1999 and June 2000. "Approximately 9 million federal employees, retirees and dependents rely on [the FEHBP] for high-quality health care options at affordable prices," Weldon read from a prepared statement. "And I share their concern with the continued escalation of FEHBP premiums." In 1998, then-chairman Rep. John Mica, R-Fla., expressed similar concerns. "These steep increases in health care premiums confront federal workers and devastate federal retirees," he said. William Flynn, associate director for retirement and insurance at OPM-who has testified at all four annual hearings-said the premium increases this year are "disappointing and unacceptable," but are the result of health care market trends outside OPM's control. The factors driving up premiums include rising prescription drug costs and utilization, advances in medical technology, utilization of medical services, medical inflation and the aging of the federal workforce, Flynn said. National Treasury Employees Union President Colleen Kelley questioned OPM's management of the FEHBP, suggesting that the agency should be better able to negotiate lower premiums based on the size of the program, which is the largest employer-sponsored health insurance program in the country. Stephen Gammarino, senior vice president for the federal employee program at BlueCross BlueShield, attributed some of the premium increases to mandates, such as coverage of substance abuse treatment, imposed on health plans by OPM and Congress. Gammarino also said that public and private sector consumers push for more coverage and use services more frequently than they used to. Dr. Tom Coburn, a former Republican member of Congress from Oklahoma and a practicing physician, said the problems in the FEHBP stem from changes in health care in recent decades. "Medicine is no longer an altruistic profession," Coburn said. "It is now a hard-core business." Coburn suggested that health coverage options with higher deductibles and lower premiums could help the FEHBP. Medical savings accounts and flexible savings accounts could also contain health care costs, he said. Del. Eleanor Holmes Norton, D-D.C., said she no longer considers the FEHBP a model for other health plans because of its continuing increases in premiums. Norton also questioned the value of the civil service panel's reviews of the program. "These annual hearings have had no effect," she said.