Health insurance premiums to increase 9.3 percent

Health insurance premiums for federal employees will rise an average of 9.3 percent in 2000, the Office of Personnel Management announced Monday. Premiums under the Federal Employees Health Benefits Program (FEHBP) have been spiraling upward for three years.

On average, a federal employee with self-only coverage will pay $77 more next year for health insurance, while an employee with family coverage will pay $184 more next year.

"The increases of the last several years are unacceptable," said OPM Director Janice Lachance in a written statement. "It is clear that competition in the marketplace has not effectively slowed the growth in FEHBP premiums."

FEHBP premiums rose an average of 9.5 percent in 1999 and 7.2 percent in 1998.

Federal employees will also have fewer health insurance carriers to choose from next year; 43 are dropping out of the FEHBP in 2000. Sixty-five carriers dropped out of the program last year. In 1998 there were 350 health insurance carriers in the FEHBP. In 2000 there will be 242, which will offer a total of about 300 plans for employees to choose from.

While Lachance is planning to seek more control over FEHBP insurance providers, critics argue that OPM mandates are driving companies out of the program.

"OPM's regulatory actions seem to be a contributing factor to the withdrawal of more than 100 HMOs during the course of the last two years," said Ned Lynch, senior research director at the House Government Reform Civil Service Subcommittee. "OPM's actions might be undercutting the competitive environment that previously worked in controlling the growth of health insurance costs in FEHBP."

OPM contends that numerous factors are driving up health insurance premiums, including the increasing cost of prescription drugs, the aging of the workforce and the high cost of advanced medical technologies. FEHBP mandates under President Clinton's Patients' Bill of Rights costs enrollees less than $1 per month, OPM says.

Federal employees can change their health insurance coverage during the annual FEHBP open season, which runs from Nov. 8 to Dec. 13. While premiums on average are increasing, some plans will offer lower rates and some will offer unchanged rates.

Lachance said OPM will seek legislative changes to raise the standards for FEHBP carriers and to contract directly for some benefits.

But Lynch said the civil service panel has asked the General Accounting Office to review the reasons more than 100 carriers have dropped out of the FEHBP since 1998.