Health care changes

There's bad news and good news on the health care front. First, here's the bad news. The Office of Personnel Management has announced that federal health premiums will increase by an average of 11 percent in 2003 — something it considers a great achievement in light of predictions that health care premiums in the United States may climb by as much as 20 percent.

But for the average fed, this isn't much of an achievement. Eleven percent is a lot of money. Last year, premiums increased by more than 13 percent. Most of us want to know when these increases will slow down or stop entirely.

OPM Director Kay Coles James said that she encouraged Federal Employees Health Benefits contract negotiators to take "tough" positions with carriers on behalf of enrollees, initiated a comprehensive outside audit to review the "true cost" of mandated services and worked with the OPM inspector general to enhance investigations of fraud and waste in the program.

Although the details of individual plan changes are not yet available, it is troubling to note that last March, James told carriers that OPM was asking them for their "best ideas to help contain premiums and promote quality. Some plans may want to consider reasonable proposals to introduce or increase out-of-pocket costs for some services or adjust deductibles or co-pay waivers."

If this is how James kept the average 2003 premium increase to 11 percent, then this is a phony accomplishment. It's not hard to keep the lid on premium increases if you increase deductibles and/or co-payment amounts. Your premiums may not go up as much as the national average, but what about your out-of-pocket costs? Where are the savings if your co-pay for doctors' visits goes from $15 to $25 or your hospital co-pay doubles?

On a brighter note, James announced a valuable addition to the federal benefits package that will reduce out-of-pocket costs for federal employees (but not retirees or survivors) — flexible spending accounts. The accounts allow employees to establish personal savings accounts with pre-tax dollars. Such accounts are a logical follow-on to the premium conversion plan the federal government currently offers to employees but not retirees or survivors.

Beginning in May 2003, employees will be able to set up health care flexible spending accounts to use for out-of-pocket costs including co-payments and deductibles and for health care expenses not covered by insurance, such as dental services and eye care. Employees also will be able to set up accounts for dependent-care expenses for children and aging parents.

On a final note, I'm concerned about the gradual divergence between Federal Employees Health Benefits for active employees and those for retirees and survivors. They're not the same. All I can say is shame on OPM for abandoning those who've devoted their entire working lives to their country!

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at milt.zall@verizon.net.