Choose wisely: Health care costs on the rise
It is now open season for federal employees to move to a new health insurance plan. However, that flexibility to change plans every year and the rising costs of prescription drugs are making health care coverage more expensive for employees.
Average annual subscriber premiums for the Federal Employees Health Benefits Program (FEHBP) will increase by 9.3 percent in 2000. It is a much higher increase than had been expected, although it seems to be in line with what private-sector firms will encounter in 2000. This year's rate increase follows a 9.5 percent increase in 1999 and a 7.2 percent increase in 1998. On average, a FEHBP member with self-only coverage will pay $33.04 every two weeks, which is $2.94 more than in 1999. A member with family coverage will pay $71.76, or $7.09 more than last year.
Unfortunately, no one seems to be able to come up with a way to control the ever-increasing cost of health insurance. Managed care seems to have hit its limit on controlling costs and providing satisfactory care.Still, it is open season again, and you are faced with the decision of which plan to choose. Should you stick with the one you have or choose another? Should you switch from a health maintenance organization to a fee-for-service plan or vice versa? These are difficult questions to answer.
Fortunately, federal workers need to make a commitment for only one year. But perhaps that's part of the problem. Because federal employees can switch plans every year, plans are paying out more in benefits than they would if there were an open season only once in, say, five years. That's because if a federal employee learns in October that his or her child needs braces, the employee will switch to a plan that pays benefits for these services. If the employee switches, the new plan will have to pay benefits it ordinarily would not have paid.
Someone who is young and healthy will pick a plan that is inexpensive and does not offer the best benefit package. That person is betting that he or she will not need the benefit plan providing the most coverage. Of course, no one has a crystal ball, and many employees guess wrong. However, by allowing employees to switch each year, the cost of benefits goes up for everyone.
In addition, prescription drug costs continue to increase at a faster clip then other health care costs. You will find that many plans have increased the cost of prescription benefits, whether you buy them at a local drugstore or by mail. For example, Blue Cross and Blue Shield - the largest carrier in the FEHBP - has increased its charge for a 90-day supply of medicine from its mail-order pharmacy. This year, $12 got you a 90-day supply of either a brand name or a generic drug. In 2000, a 90-day supply of a generic drug still will cost $12, but a brand name drug will cost $20. If you have the standard option, which is the most popular FEHBP plan, your copayment will be 25 percent instead of 20 percent. Other plans are making similar adjustments.
Congress seems to have lost interest in this issue. Last year, an election year, the House Civil Service Subcommittee held hearings on this issue and promised to "look into it." I guess it is still looking; its lack of attention to the matter has been conspicuous.
Last year, Stephen Gammarino, a vice president with the Blue Cross and Blue Shield Association, testified that prescription drug costs represent 30 percent of total benefits costs in the Blue Cross plan and described the increase in drug costs as alarming. At that time, I commented that "enrollees can get a 90-day supply of any medicine for $12 - the same as in 1998. If drug costs are rising alarmingly, why isn't Blue Cross charging more?" [FCW, Nov. 16, 1998]. Well guess what? It took my advice.
For federal employees who are considering a new health plan, there are several places to go for information. For those with Internet access, the Office of Personnel Management is offering a service called PlanSmartChoice.com (www.plansmartchoice.com/fehbp) that it developed with a vendor. OPM says this tool can help employees choose among health plans. However, it then says, "We can not certify the accuracy of the information presented. Before you decide to change your health plan, carefully read the plan's brochure, verify the premium rates, and make sure you are eligible to enroll in the plan." That's a big help, isn't it? If OPM cannot certify the accuracy of the information, it should not be inviting you to use this mechanism.
The only useful information I found at the OPM World Wide Web site was some links to other sites. For example, a site that describes how to evaluate the quality of a health care plan is worth a look. Otherwise, the OPM site is woefully lacking in useful information. OPM offers a link to the American Association of Health Plans site. Is that where you will get the best information on health plans - from the organization that lobbies Congress not to pass legislation permitting individuals to sue their HMOs? I don't think so.
--Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.