Federal employees’ health insurance premiums to rise 8.8 percent

The average amount federal employees pay for their health care will rise 8.8 percent in 2010, the Office of Personnel Management announced on Tuesday.

"An 8.8 percent increase is not an increase we feel comfortable with," said Nancy Kichak, associate director for strategic human resource policy at OPM. "It's not one that we would like to have to see our enrollees bear, but unfortunately we're a victim of the market. This is the cost we're experiencing."

The total average premium increase for plans in the Federal Employees Health Benefits Program will be 7.4 percent, or $25.57 per pay period, OPM said. Of that figure, the government will absorb $16.35 per pay period, increasing its contribution to employees' health care costs by 6.8 percent. That leaves federal employees with an average increase of $9.21 in their premiums, or 8.8 percent.

Broken down by type of coverage, the typical employee will see premiums increase by $5.98 per pay period for individual coverage, and by $12.87 per pay period for family coverage.

Kichak said a number of factors are driving the increase, including the rising cost of health care in the United States, the aging of the federal workforce and the fact that 90,000 enrollees left the Blue Cross Blue Shield Standard Option. Many who switched to other plans were healthy, leaving the Standard Option with less income from enrollees who needed minimal care.

Monthly premiums for individuals enrolled in the Standard Option will rise 15.1 percent in 2010, or $23.02. And premiums for families in the plan will grow 12.4 percent, or $44.38.

The price of dental coverage will increase 4.2 percent, and the price for vision insurance will rise 2.4 percent, Kichak said.

"It keeps going up, much, much more than the average increase in pay," said Bill Bransford, general counsel for the Senior Executives Association. "Soon it's going to eat up all the salary increase and then some."

Colleen Kelley, president of the National Treasury Employees Union, said she was disturbed by the increase in premiums. This is the third straight year average FEHBP premiums have increased.

"These increases are coming even as OPM again uses money from reserves to keep the increases down," Kelley said. "Clearly, the need to leverage the size of the FEHBP has become even more apparent."

Kelley has long been an advocate for using FEHBP's large enrollment to try to negotiate more favorable prices on prescription drugs for plan participants, and she said the union brought up the issue during a meeting on FEHBP drug pricing and benefits in Washington on Tuesday.

Kichak said that in 2010, the American Postal Workers Union Health Plan would offer incentives to enrollees who switched to generic prescription drugs, which generally are priced lower than their brand-name equivalents.

And she said FEHBP plans to debut a number of other benefits changes in 2010. The agency is introducing Managing My Own Health, a suite of tools that will include personal health records employees can download, fill in and give to their doctors to avoid dangerous drug interactions and make providers aware of allergies and health histories. The tools also will feature ratings of how well different states and insurance plans perform in diagnosing and treating various conditions. Lorraine Dettman, assistant director for insurance services programs, said OPM met with agency benefits officers Tuesday morning to let them know about the new offerings, and would work with agencies to make sure employees were aware the forms were available.

FEHBP plans also will be required to cover treatment for mental health and substance abuse problems at the same level that they cover treatment for physical health issues. Kichak said that while FEHBP plans had been required to offer equivalent coverage for in-network mental health treatment since 2001, plans now must provide equivalent coverage for out-of-network treatment as well. In addition to mental health treatment, some health care policies will begin offering plans to help manage childhood obesity and diabetes, Kichak said.

While OPM does not have new policies to announce at present, the agency has begun a series of meetings with major insurance providers to see if there are changes it could make to drive down health insurance prices, Kichak said. OPM also is looking at co-payments on preventative treatment, which can reduce the overall cost of health care.

Open season, the period when federal employees can switch their enrollments in health benefits programs, will run from Nov. 9 to Dec. 14.