Federal health insurance premiums to rise by 7.9 percent

The average health insurance premium for the Federal Employees Health Benefits Program will go up by 7.9 percent in 2005, the Office of Personnel Management announced Monday.

OPM officials noted that the increase broke a four-year trend of premium increases of more than 10 percent. The FEHBP provides health insurance to federal workers, retirees and dependents, and has 2.2 million active employees, 1.8 million retirees and 4 million dependents enrolled.

OPM Director Kay Coles James called the new figures "a significant downward shift in this unwelcome trend."

"We've broken through the double-digit increase barrier," James said. "We are encouraged but, as I've said, not satisfied."

From 2001 to 2003, the FEHBP posted premium increases of 10.5 percent, 13.3 percent and 11.1 percent. For 2004, the increase was projected to be 10.6 percent but fell slightly below 10 percent.

"We were in single digits last year, we just didn't know it," said Nancy Kichak, OPM's chief actuary.

During the past four years, the FEHBP average increases have been below health insurance industry levels, according to OPM.

OPM officials gave a number of reasons for the lower than usual increase and said that despite the news, insurance rates are still climbing.

"It was not accomplished by reducing benefits," said Abby Block, OPM's deputy associate director for employee and family support policy.

Kichak noted that FEHBP members are using outpatient care at a slower rate. Block said the cost of prescription drugs and medical visits has not been climbing as rapidly as usual.

"The big drivers have both moderated," she said.

James attributed the 7.9 percent increase in premium costs to the work of OPM personnel.

"Excellent team, excellent policy, tough negotiators," she said.

Premiums for single employee health plans will rise by an average of $4.32 biweekly, according to James. For family plans, the biweekly premium is set to rise by an average of $9.99.

OPM officials stressed that the numbers they presented are averages and while some will see their premiums drop, many federal employees will see them rise at a higher rate.