Many Federal Rates Stay Flat
Tuesday, October 24, 2006
Federal employees typically enter each benefit enrollment season with the assumption their health insurance premiums will go up substantially. But that won't be the case for most federal enrollees in 2007.
The most popular health plan provided federal employees, the Blue Cross and Blue Shield standard option, will reduce the employee's share of biweekly premium costs by 77 cents for individuals and by $1.29 for family coverage.
Two other popular plans, the Blue Cross basic option and the Government Employees Hospital Association standard option, are holding the line on premiums. Federal employees in those plans will see no change in their premium payments.
Another plan with strong enrollment, the Mail Handlers Benefit Program, will increase premiums next year, but the Mail Handlers standard option will be competitive. Premiums for the family standard option are rising by 3 percent.
Although the Federal Employees Health Benefits Program typically offers more than 250 insurance options every year, most federal employees and retirees have clustered in the major national, fee-for-service plans, such as Blue Cross, GEHA and Mail Handlers.
More than 56 percent of FEHBP enrollees -- almost 2.3 million people -- chose the Blue Cross plans this year, for example.
For 2007, the Office of Personnel Management, which administers the federal health insurance program, reversed a six-year trend of significant premium increases in most fee-for-service plans by drawing $500 million out of FEHBP's cash reserves to buy down the overall premium hike. If OPM had not drawn on the reserves, federal employees could have faced an average rate increase of 6.8 percent, in line with the increase for 2006.
While the use of the program's reserves helped reduce or, in some cases, eliminate rate increases for the national plans, it did not help health maintenance organizations, which operate on fixed-price contracts in FEHBP, officials said.
As a result, HMO premiums will rise an average of 6.3 percent next year, and some Washington area HMOs will raise their rates even higher.
The employee share of M.D. IPA premiums, for example, are rising by nearly 20 percent. Aetna's Open Access HMO will increase employee premiums by about 12 percent for basic family coverage, and the Kaiser Foundation's mid-Atlantic plan will boost standard option coverage for individuals and families by 9.7 percent.
The government picks up about 71 percent of premium costs in its role as employer, and OPM negotiates with insurance companies annually to maintain certain levels of benefits. For next year, OPM has encouraged companies to show cost information on their Web sites about certain procedures, such as Caesarean delivery, colonoscopy and knee replacement, so that employees can make more informed choices about their health care.
The "open season" for federal employees and retirees to select their health insurance coverage begins on Nov. 13 and runs through Dec. 11. OPM has posted some information on its Web site and will add more information shortly before the enrollment period begins.
OPM officials recommend that enrollees:
· Carefully read their current plan's brochure, and certainly brochures from competitors if they are considering switching coverage, to see what benefits changes are being made for 2007. Changes to some benefits, such as prescription drugs, can be important to retirees or others concerned about out-of-pocket costs.
· Compare prices and benefits. New plans, such as consumer-driven options and high-deductible health plans that feature health savings accounts, may require extra homework.
· Check with doctors and specialists to make sure they will be part of a plan's network. Saving money on premiums may not make sense if a favorite doctor or hospital has left a plan's provider network.