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In open season for insurance plans, look beyond premium

Tuesday, November 23, 2010; 9:09 AM

Open season, the period when federal employees can choose health insurance plans, runs through Dec. 13.

Employees are always concerned about the amount they pay for insurance through the Federal Employees Health Benefits Program. But the premium isn't the only thing to examine.

Walton Francis, a health economist and primary author of "Checkbook's 2011 Guide to Health Plans for Federal Employees," says they should also focus on out-of-pocket costs, the various types of plans, their particular health situation and the insurance companies their doctors use.

The Federal Diary spoke with Francis about this year's offerings. Here is an edited version of that conversation:

Diary: What are the important things federal employees should pay attention to during open season?

Francis: There are many examples of things people ought to do that they mostly don't do. What people need to do is pay serious attention. It may not take a lot of time, maybe only 10 or 15 minutes. But you need to pay serious attention to what's going on in your life and how your health plan looks compared to the alternatives.

Compared with Blue Cross standard - which is what most people are in - GEHA standard, if you switch, you will save $1,400 [for the family plan]; M.D. IPA, an HMO, $1,800, on average; Blue Cross basic, $1,900; GEHA high deductible, $2,000; Aetna consumer-driven and high deductible, also $2,000; Kaiser standard HMO, $2,500; and APWU (American Postal Workers Union) consumer-driven, also $2,500.

That's serious money on the table.

A second example is what you can save with flexible savings accounts, in your out-of-pocket costs. Probably 90 percent of federal employees ought to use FSA.

A third example: Suppose you have an illness that your plan doesn't cover as well as it used to, because of a benefit change. Let's say you need a new drug and it's not a preferred drug with plan A, but it is with plan B. That could be a multi-hundred-dollar difference.

I'm giving you three examples of why paying attention is a vital thing to do. And that's the No. 1 piece of advice. Pay attention and do some homework.

Diary: Federal retirees will get no cost-of-living adjustment and federal employees may get just a 1.4 percent pay increase, while their insurance premiums will rise an average of 7.2 percent. As a health care economist, can you explain why health care goes up more than other costs?

Francis: There are a number of answers for that, but the simplest and most important part of it, I think, is medical technology improves every year and more of the improvements are cost-increasing than cost-saving. And the other thing going on that's really big in FEHBP and health care generally that people don't often realize is, because older people are sicker and more expensive as the population ages, health care costs on average go up. The American population is an aging population, and the federal employee universe, including retirees, is a very rapidly aging population.

By the way, the increasing costs is also producing increasing longevity. Treatments are better. The health care system has greatly improved survival rates for things like heart attacks and cancer over the last 10 to 20 years. It's not just that costs are going up. You get more for your money, too.

Diary: Why are premiums for some plans going up much more than others?

Francis: A lot of plans this year have zero percent premium increase. And one plan, the Mail Handlers standard option, it went up about 33 percent. The range is from zero to 33 percent. Clearly, that's another reason for paying attention. Each plan has to cover the cost of the people in it. The Mail Handlers, for whatever reason, has been less successful over time at controlling costs. It may be, and I think it is, they have a disproportionate number of older people and annuitants, loyal members of the plan, and as those people get older they get more expensive.

Diary: How does the new health care law affect federal employees?

Francis: Preventive care is now 100 percent covered in all FEHBP plans. The deductible doesn't apply. There is no co-pay. You are strongly encouraged to get your annual physical and get the shots you need. We have very good prevention benefits this year. They've gone from very good to superb. And that's mainly due to health reform.

The other big change is up to age 26 coverage [for adult children of employees]. That's a very important benefit change. The other thing that I think is really kind of neat that people don't know is it's actually coverage up to age 29 with temporary continuation of coverage. You get eligibility for a three-year period to stay in FEHBP as an enrollee on your own. You have to pay the full premium, but it's three more years of coverage.

Those are both very positive changes.

Many federal agencies provide free access to the "Guide to Health Plans" for their employees. More information is available at www.checkbook.org/newhig2/hig.cfm

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