OPM floats proposal for high-deductible health plan

The Office of Personnel Management has sent a formal legislative proposal to Congress seeking to increase the number of high-deductible, consumer-directed options in the Federal Employees Health Benefits Program.

If passed into law, the proposed bill would lift the cap on the number of options insurance providers can offer federal employees, which is now set at two. That would allow Blue Cross Blue Shield of America's Federal Employee Program, the largest provider, to offer the high-deductible plan.

These kind of plans, which already are offered to federal employees by a number of other smaller providers because of a 2004 change in the law allowing them to exceed the cap, include health savings accounts that participants can use to cover medical costs, or spend on personal needs if there are leftover funds. High deductibles further encourage conservative health care spending, and the plans feature lower annual premiums.

But the National Active and Retired Federal Employees Association came out harshly against wide-scale introduction of these plans, which OPM said will save the government $3.4 billion over 10 years.

NARFE president Charles Fallis said last week that consumer-directed plans are "a bad deal for federal employees and retirees of any age who have moderate to high health care costs, or who are living from paycheck to paycheck."

The association and some federal employee unions are concerned that these plans will draw out younger, healthier federal employees from traditional insurance plans, which will raise prices for everyone else.

"If [consumer-directed health plans] become more popular, premiums for comprehensive plans could increase and/or benefits could be cut," Fallis said.

An OPM spokesman said the agency believes the new plans will attract participants from all age and health brackets who want more control over their health care dollars. The spokesman also said OPM is working to ensure the premiums stay within normal range and will closely monitor consumer-directed plans in case of adverse effects.

A spokeswoman for the Blue Cross Blue Shield federal employee program said that while her company is not opposing OPM's proposal, it has not decided whether, given the opportunity, it would offer such a plan.

On Tuesday, the Government Accountability Office released a report (GAO-06-514) finding that enrollment in consumer-directed health plans in the private sector rose from 3 million to between 5 million and 6 million from January 2005 to January 2006. GAO attributed growing enrollment to the rising cost of health care and the increasing number of companies offering such plans.