Health care premiums soar

You'll be paying more than expected for your federal em-ployee health benefits

insurance premiums this year — and there's no relief in sight.

The Office of Personnel Management said in June that it expects premiums

for 2001 to increase on average by about 8.7 percent. But its prediction

fell short. In fact, premiums will increase about 10.5 percent beginning

in 01/2001. Meanwhile, premiums rose an average of 9.3 percent in

2000 and 9.5 percent in 1999.

For feds enrolled in the highly popular Blue Cross/ Blue Shield plan,

this means that biweekly premiums will increase by $4.22 for those enrolled

in the standard plan, self-only. Those with a family enrollment will see

their biweekly premiums increase by $14.13.

As usual, OPM Director Janice La-chance called the rising rates "unacceptable."

She's been saying that for the past three years. OPM sought political cover

by pointing out that health care costs are rising nationwide and that some

organizations are experiencing even higher premium increases. Various health

care mavens estimate that premiums in the private sector will increase by

12 percent to 24 percent next year.

The biggest factor in the premium increase for the Federal Employees

Health Benefits program is the rising cost of prescription drugs. Attempts

to control these costs in government have been unsuccessful. OPM recently

canceled a planned two-year pilot program with the Department of Veterans

Affairs to lower prescription drug prices. The pharmaceutical industry's

three largest manufacturers refused to fill orders. Under the program, one

federal health plan would have been allowed to purchase prescription drugs

off the Federal Supply Schedule at a 24 percent discount.

Feds want action. The American Federation of Government Employees issued

a statement deriding the higher rates and the cancellation of the pilot

program. Feds were given "a one-two punch from the big drug companies,"

said AFGE President Bobby Harnage.

What I don't understand is why prescription drugs aren't reducing hospital

utilization. If OPM is saying that premiums are rising because of the increased

use of prescription drugs, they're implying that the utilization of other

health care services isn't declining, as you'd expect it to.

One explanation is that new medications are enabling people to live

longer and causing them to incur more health care costs. Or is the pharmaceutical

industry ripping us all off? I don't know which explanation to believe,

but I wish our political leaders would find out so we can make health care

premiums more affordable.

FEHB open season, which allows eligible federal employees and retirees

to stay with their current plan or select a new one, runs from Nov. 13 to

Dec. 11.

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

column for Federal Computer Week. He can be reached at miltzall@starpower.net.

OTHER MILT ZALL COLUMNS

"Of politics and premiums" [Federal Computer Week, July 17, 2000]

"Choosing wisely" [Federal Computer Week, June 19, 2000]

BY Milt Zall
October 30, 2000

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