Health insurance changes included in 2001 budget

The Clinton administration has decided to resurrect several proposals to change the Federal Employees Health Benefits Program that failed to gain support last year, and is introducing several new changes designed to reduce federal employees' health care costs.

Under a new legislative proposal announced by the Office of Personnel Management on Thursday, federal employees' health insurance premiums would be considered pre-tax income, saving the average employee $434 in taxes. The practice is common in large private sector companies, OPM said.

Bobby Harnage, president of the American Federation of Government Employees, said he's happy that the administration is doing something about rising health care costs. FEHBP premiums have increased by an average of more than 8 percent for each of the last three years.

"It goes a long way to providing some relief to employees," Harnage said. "But it still doesn't do anything to reduce the overall cost of the premiums."

To address that issue, OPM wants Congress to give it more freedom to leverage the government's purchasing power to get better rates and more benefits from FEHBP carriers. OPM has yet to release a specific proposal on the issue, but the agency says government workers and their families would be able to get better dental benefits if the proposal is approved by Congress.

Weak dental coverage is a common complaint among federal workers. But suggestions in the past that OPM be given more control over premiums have been opposed by both health insurance companies such as Blue Cross/Blue Shield and by congressional Republicans, who say the strength of the FEHBP is market-based competition among health insurance providers.

For the same reason, health insurance companies and Republicans last year opposed a Clinton administration proposal to require FEHBP providers to offer mental health and substance abuse coverage to federal employees. The administration is re-introducing that proposal as part of its fiscal 2001 budget proposal.

The administration is also once again supporting long-term care insurance coverage for employees. Long-term care insurance covers costs not normally paid by traditional health insurance, such as extended nursing care, home health care and other services for people who require constant medical attention.

Three long-term care insurance bills were introduced in the House last year. None was acted upon.