Federal health premiums to rise only slightly

In January, federal employees will see their health insurance premiums rise an average of 2.3 percent -- a much smaller increase than in years past.

Individual enrollees in the Federal Employees Health Benefits Program will pay an extra $1.45 every two weeks for a total of $58.45. Those with family plans will pay $3.13 more for a total of $131.64, on average.

And in the biggest plan, Blue Cross Blue Shield, premiums won't go up at all. They will even decrease under certain options. More than 50 percent of the 8 million FEHBP participants belong to Blue Cross Blue Shield. Local plans, such as those operated by health maintenance organizations, will get more expensive.

Officials at the Office of Personnel Management, which oversees the FEHBP, said the primary reason for a lower premium hike this year is a more liberal use of reserve funds. Those are taken from participants' premiums each year and hoarded to cover unexpected medical costs.

OPM Director Linda Springer said at a press briefing Tuesday that the insurance companies themselves first floated the idea of dipping into reserves this year, and her financial team found the circumstances were right. OPM will use $500 million from an $11 billion pot of reserves -- less than 5 percent.

"Performance was good enough, and [we] didn't have to build" the reserve, Springer said.

But Jacqueline Simon, public policy director for the American Federation of Government Employees, said the reserves are being used improperly.

"What we know is true is that enrollees' premiums will go up by more than the government's premiums," Simon said. "And the reason for that is that OPM manipulated the allocation of the so-called excess reserves to give themselves a greater subsidy."

The government's contributions will go up 1.6 percent next year. That's smaller than the enrollee increase because of a technical matter involving timing differences in calculating the two portions, according to Nancy Kichak, OPM's associate director for strategic human resources policy.

Last year, enrollees had a 10 percent average premium increase, while the government's hike was 5.2 percent. Premium increases peaked in fiscal 2002, when they reached 12.7 percent between employees and the government. The last time they were this low was in 1997, when there was a 1.6 percent hike divided between enrollees and the government.

Federal employees and retirees will be able to pick their insurance plan for 2007 during open season, which starts Nov. 13. About a week before that, OPM will post brochures on its Web site detailing costs and coverage in each plan.

For the first time, current and retired federal employees will be able to choose supplemental vision and dental insurance during the open season. Biweekly premiums for family dental plans range from around $20 to $55 and feature 100 percent coverage for preventative dental work and varying coverage for other procedures. Family vision insurance will range from about $8 to $16 every two weeks. There is no government subsidy for the dental and vision insurance.

Also for the first time, OPM is publicizing specific insurance plans that meet its standards for cost transparency. The 18 companies will let enrollees get cost information for certain procedures including cataract repair, caesarean birth and knee replacement to allow participants to shop for the best deal. OPM will feature the companies during open season.