Of politics and premiums

Federal employees enrolled in the Federal Employees Health Benefits program

are going to see their premiums rise in 2001.

The exact amount of the increase probably won't be known until October,

but because the Office of Personnel Management is going on record as estimating

an 8.7 percent increase, you can bet that it will be in that neighborhood.

This action follows an average increase of 9.3 percent this year.

Rising costs for prescription medicine and greater use of prescription

drugs are partly to blame, according to William Flynn, OPM's associate director

for retirement and insurance. Information that he provided to a congressional

panel indicated that 25 percent of FEHB premiums pay for prescription drug


Stephen Gammarino, senior vice president of the Blue Cross and Blue

Shield Association, said that it may be necessary to increase "cost-containment"

measures. Blue Cross has already raised the co-insurance amount that federal

workers pay for prescription drugs in the governmentwide Service Benefit

Plan. If Blue Cross plans to raise the co-pay further to keep premiums stable,

it's a false economy. Feds will pay more. The headlines won't be so bad,

though, and that's what Blue Cross and OPM want.

For the past two years, Flynn's boss, OPM Director Janice Lachance,

has said that FEHB premium increases are "unacceptable." And OPM says that

it is working to slow down the increase in health benefit premiums. But

it's difficult to see what OPM can do to counter a national trend. Federal

employees' health benefits premiums are rising just like everyone else's.

I think OPM needs to be concerned only if private-sector employees are not

encountering increased premiums while federal workers are.

How would OPM lower costs? Squeeze carriers too much and they will leave

the program. In the private sector, companies stop offering health insurance

in certain states because the legislatures set requirements that carriers

find unacceptable.

OPM said in its congressional testimony that it would like to set standards

for the providers in the FEHB program because such standards will promote

health care quality and cost-effectiveness. I think this is pure politics.

Lachance is asking Congress for authority that she already has. OPM negotiates

contracts with FEHB carriers every year and stipulates conditions by which

carriers have to abide.

The president of the American Federation of Government Employees, Bobby

Harnage, testified that federal workers should receive the kind of health

benefits that veterans and military service members receive. But if feds

get more benefits than they currently do, it's going to cost more money.

Harnage also said that the carriers in the FEHB should be subject to

federal cost-accounting standards to ensure that every health care dollar

devoted to FEHB is spent on the program and its beneficiaries. Again, I

couldn't agree more, but OPM already has the right to oversee carriers.

I assume that this is not a real problem, just political propaganda.

—Zall is a retired federal employee who since 1987 has written the Bureaucratus

column for Federal Computer Week. He can be reached at [email protected]


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