Health care premiums on the rise for feds

Although the Office of Personnel Management says health benefit premiums will go up on average by 8.5 percent in 1998 many federal employees will be faced with even steeper premium increases next year unless they switch health benefit plans. For starters OPM misrepresented the amount of the 1998 increase. The federal government's share of health benefit premiums will rise by 5.7 percent in 1998 and enrollees will see their premiums increase by 15.4 percent. According to OPM that results in an "average" increase of 8.5 percent.

For federal employees the 8.5 percent figure is meaningless. The relevant number is 15.4 percent because it represents the average out-of-pocket increase employees will have to contend with.

Even the term "average increase" is misleading. For example federal employees currently enrolled in the National Association of Letter Carriers' (NALC) fee-for-service plan will see their biweekly premium for a family enrollment increase from $122.66 to $214.68 - a 75 percent hike! As if that were not bad enough the plan is eliminating its dental benefits doubling its co-insurance requirements for outpatient benefits almost doubling the co-payment required for a physician office visit drastically reducing prescription drug benefits more than doubling the catastrophic protection threshold and reducing hospital benefits.

Other plans are not hit quite as hard. But Government Employees Hospital Association Inc. for example is increasing premiums by roughly 24 percent while reducing some benefits.

The only plan that appears to be holding its own is Blue Cross and Blue Shield. Their high-option-plan premium actually goes down in 1998 while its standard-option premium rises by less than 10 percent.

All of this raises deep concerns about the future of the Federal Employees Health Benefits Program (FEHBP). The program originated to give federal employees an annual choice among a variety of plans. But over the years the number of fee-for-service plans has declined steadily and it's hard to see how some plans such as the NALC can continue.

Of course there are plenty of health maintenance organizations from which to choose but you must abide by their rules and use their providers. If that's not your cup of tea you must choose from an ever-decreasing selection of fee-for-service plans.

I think OPM should investigate why plans such as the NALC are having such a difficult time competing with Blue Cross. My guess is that new benefits mandated by OPM and Congress - such as minimum stays for childbirth and mastectomy patients no dollar limits on mental health coverage and increased availability of mammography - are partly to blame for the premium increases.

As an aside you may remember that Congress passed legislation last year prohibiting dollar limits on mental health benefits. So what did the carriers in the FEHBP do? They dropped their dollar limits and replaced them with utilization limits on the number of days of mental health benefits per year. Consequently the president's statement that the legislation barring dollar limits on mental health benefits was an "important step toward providing better mental health coverage" should not be believed.

I do not believe it's a good situation when federal employees cannot choose from more than one fee-for-service plan and it appears we are headed in that direction. If there is going to be only one fee-for-service plan OPM should specify what benefits the plan must provide and allow different private-sector insurance companies to compete every two years for the "contract" to provide those benefits to federal employees. That approach if administered efficiently would ensure good benefits at reasonable rates. In the meantime shop very carefully during this year's open season that runs through Dec. 8.

-- Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.

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