The annual federal health insurance shopping period ended Monday, and as with many year-end purchases, the bills will come due in January.

The tab will reflect an average 11.1 percent increase in premiums by plans in the Federal Employees Health Benefits Program. The premium rise will be the fifth straight increase near or above the double-digit mark for the program that covers more than 8 million federal and postal employees, retirees and family members.

The rising costs were front and center at a rare post-adjournment hearing yesterday before the House civil service subcommittee that offered a preview of several possible approaches to easing health care sticker shock.

Rep. Steny H. Hoyer (D-Md.) said he will reintroduce in the new Congress legislation to increase the government's share of FEHBP premiums from a 72 percent average to 80 percent. "Every year participants are digging deeper and deeper into their pockets to pay premiums and are diminishing their take-home pay," Hoyer said.

Hoyer said his legislation would bring the government share more in line with what most private and state employers pay and would be a valuable recruiting and retention tool. A similar proposal in the just-ended Congress drew 95 House co-sponsors but did not advance.

Rep. David Joseph Weldon (R-Fla.), the subcommittee's chairman, promised to take the proposal under consideration but said it might be necessary to find savings to offset the cost, which Hoyer estimated to be in the hundreds of millions of dollars. "I think it's a justifiable cost," Hoyer said.

Dan G. Blair, deputy director of the Office of Personnel Management, however, estimated the first-year cost at $1.7 billion.

Starting in July, all executive branch workers will be eligible to save on their health costs by participating in flexible spending accounts, Blair noted. FSAs allow employees to set aside payroll dollars on a pretax basis to be used for out-of-pocket costs such as co-payments and deductibles, as well as for medical and dental expenses not covered by health insurance.

The FSA program follows the launch in 2000 of the "premium conversion" arrangement, in which employees can pay FEHBP premiums with pretax dollars, at an average annual savings of about $450.

But Blair told Federal Diary associate Eric Yoder that OPM has now mined the tax code for all the breaks available and that any further changes would require legislation.

Weldon raised the prospect of such changes as part of a possible move to a cafeteria-style benefits program, in which employees would have a pool of money to use in choosing the benefits most valuable to them. In such an arrangement, he said, some enrollees might designate enough money to cover the entire cost of FEHBP coverage.

Federal employee unions have been cool toward the cafeteria concept, however, out of concern that the available money would be limited and employees would be forced to give up certain benefits. Hoyer said he was "very concerned" that a cafeteria plan would adversely affect older employees with more obligations than younger employees.

Author and economist Walton Francis raised another possible approach -- setting the government's share at a dollar amount rather than a percentage. That would encourage enrollees to shop more aggressively and would allow those choosing lower-cost plans to have the entire premium paid by the government, he said.

Unions traditionally have resisted that idea as well, since past proposals along those lines would have linked the annual increase in the dollar amount to general inflation. Since inflation in the medical sector has been running higher, such a design would ultimately shift more costs to enrollees, they argue.

Blair said OPM also will continue to encourage federal plan carriers to offer alternative designs, such as the "consumer-driven option" introduced for 2003 by the American Postal Workers Union plan. That option features a personal spending account, a deductible once that account is exhausted and then coverage under a preferred-provider organization.

"We believe this is a very promising approach, one which may help to hold down health care costs by giving consumers additional control as well as increased awareness of how they are spending their health care dollars," Blair said.

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