Rep. Mary Rose Oakar (D-Ohio) says the $456 million refund Blue Cross-Blue Shield wants to give the U.S. Treasury should be used instead to reduce the health insurance premiums of federal workers and retirees.

The insurance firm has asked the Office of Personnel Management to allow it to refund $754 million from its reserve account, with $289 million of that going directly to the 1.5 million U.S. workers and retirees who subscribe to its plan.

If OPM approves the refund, checks ranging from $18 to $374 per subscriber would be mailed out in August. Blue Cross-Blue Shield, the nation's largest health insurance plan, says the refunds are possible because workers are not using their health insurance as frequently as they had in previous years.

Oakar chairs the House subcommittee that oversees the federal health insurance program. She approves of the refunds to Blue Cross-Blue Shield subscribers, but thinks the rest of the rebate -- nearly half a billion dollars -- should be plowed back into the health program, rather than put in the Treasury. She says the money could be used to reduce some premiums and hold down increases in others planned for next year.

Meanwhile, the Mail Handlers Benefit Plan, second largest to Blue Cross-Blue Shield in the federal health program, has blasted Blue Cross-Blue Shield for its refund proposal. The union says Blue Cross-Blue Shield is pulling a "grandstand play" to lure federal workers back into its fold next year.

The number of federal workers choosing Blue Cross-Blue Shield insurance has declined from a high of more than 50 percent a few years ago to about 41 percent, as many workers and retirees shifted to less expensive plans. Most of the plans have made benefit cutbacks in recent years and introduced cost-sharing features that helped reduce utilization.

James J. LaPenta, director of the Mail Handlers insurance plan, has written the House Post Office-Civil Service Committee asking it to take part of the federal health program's nearly $2 billion in reserves and use it to raise benefits and lower rates.

More than 10 million members of the federal family, from Supreme Court justices to the families of government clerks, are covered by the federal health program. Nearly half the population of this area is covered by the federal program, which contains more than 200 plans.

Contract negotiations between insurance firms and OPM, which runs the federal health program, begin in August, at about the time Blue Cross-Blue Shield plans to mail out refund checks to subscribers. OPM said it is studying the legal implications of the unprecedented refund proposal.