Lawmaker seeks to boost government portion of health premiums

Rep. Steny Hoyer, D-Md, said Wednesday he plans to reintroduce a bill to increase the government's contribution to federal employees' health insurance premiums when Congress reconvenes in January.

"Every year, participants in the [Federal Employees Health Benefits Program] are digging deeper and deeper into their pockets to pay for health care," Hoyer said during a hearing of the House Government Reform Subcommittee on Civil Service, Census and Agency Organization. Subcommittee Chairman Dave Weldon, R-Fla., called the hearing to discuss options for reforming FEHBP.

Three months ago, the Office of Personnel Management announced that federal employees' health insurance premiums would increase by an average of 11.1 percent in 2003. This year, premiums rose by 13.3 percent, and in the past four years, they have jumped nearly 50 percent. The steady increases have raised concerns among federal employees, government leaders and lawmakers.

In March 2001, Hoyer introduced H.R. 1307, which would have raised the government's portion of health care premiums from 72 percent to 80 percent. Several other lawmakers offered similar bills, but none of them were passed during the last congressional session. According to Hoyer, the recent rises in health care costs are hindering recruitment and retention efforts.

"The rising cost of health care premiums is becoming a liability in retaining hard-working federal employees, as well as recruiting those who are considering careers in public service," Hoyer said.

Leaders from the two largest federal employee unions, the American Federation of Government Employees and the National Treasury Employees Union, joined Hoyer in his criticism of FEHBP.

"Because of its poor structure and the ability of its participating insurance carriers to use their financial and political power to manipulate [OPM's] administrative decisions, both taxpayers and federal employees and retirees pay far too much for the benefits they receive under the program," testified AFGE President Bobby Harnage.

But advocates of the plan pointed to new features, such as flexible spending accounts and a consumer-driven plan offered by the American Postal Workers Union (APWU). With flexible spending accounts, employees will be able to put aside up to $3,000 for medical expenses and up to $5,000 for child and dependent care using pre-tax dollars. Under the consumer-driven option, employers can set aside a specified amount of money each year that employees can use to pay for health care costs. Unused funds can be rolled over into the next year. Employees who spend more than the allotted amount must pay a deductible and then traditional health coverage kicks in.

"This design puts the onus on the individual to shop wisely for health care services, rather than on the insurance carrier to try to manage their care for them," said Carroll Midgett, chief operating officer of APWU's health plan, at the hearing. "The result is a new level of consumer freedom that rewards the consumer for making wise, cost-conscious choices."

OPM Deputy Director Dan Blair said he and Director Kay Coles James were committed to improving FEHBP.

"Because we recognize how important the program is to government as it seeks to recruit and retain the workforce we need to keep our country safe and secure, we must do more to maintain quality and control costs in the FEHB program," Blair told lawmakers. "We pledge to collaborate with you and with our stakeholders to keep the FEHB program a model for employer-provided healthcare coverage."