FEHBP Premium Rise for 2009 Extremely Troubling

09/25/2008

9/25/08: An average seven percent increase in 2009 health care premiums for federal employees and retirees covered under the Federal Employees Health Benefits Program (FEHBP) indicates that the Office of Personnel Management (OPM) is still not doing an adequate job in leveraging the weight of the largest health plan in the United States to keep costs down.

“The need to leverage the size of FEHBP becomes even more apparent,” said NTEU National President Colleen Kelley recently remarked, “when you take into account that OPM once again dipped into the plan’s cash reserves to hold down the increase.”

Even more troubling, said President Kelley, is that OPM said the employee share of the cost for those covered by the most popular health care program—the Blue Cross/Blue Shield standard plan—will rise by 12.9 percent for self-only coverage and 13.4 percent for family coverage. Some 60 percent of FEHBP’s eight million participants are covered by this plan.

“This is an enormous increase,” President Kelley said, “that erodes federal employees’ standard of living.”

Federal employees and their agencies share the cost of FEHBP premiums. Overall, OPM said, the portion of FEHBP premiums paid by employees will rise by 7.9 percent next year, while the government’s share will climb by 6.5 percent.

“It is very discouraging to see average increases of this magnitude,” said President Kelley, “particularly given the bargaining power OPM should be able to exercise as manager of the nation’s largest group health plan.”

OPM also announced increases in premiums for the two-year-old dental and vision coverage program as well; dental premiums will climb by an average 5.7 percent, while the vision program will undergo a 1.1 percent increase in premiums. Employees pay the full cost of the dental and vision coverage.

President Kelley reiterated NTEU’s support for an increase in the government’s share of FEHBP premiums from an average of 72 percent to an average of 80 percent—a figure that is common among private sector employers.

The NTEU leader also criticized OPM for once again using reserve cash reserves—for at least the third time—to hold down the average increase. The use of such funds, OPM said, reduced rates by 3.1 percent overall.

“The use of reserves raises a number of serious questions,” Kelley said, including whether employees have been contributing too much in past years; whether claims have been declining or coverage has been less under the plans; and whether sufficient reserves will be available in the event a plan goes out of business—a pointed issue in this challenging economic climate—or there is a higher-than-expected level of claims.