Federal Workers See 10.6%-Health Care Increase in 2004

September 17, 2003 (PLANSPONSOR.com) - At 10.6%, even federal employees are not immune to double-digit health-care cost increases next year.

In fact, the premium hike for 2004 is the fourth consecutive annual increase above 10%, for the Federal Employees Health Benefits Program (FEHBP), which provides coverage to 8.3 million federal employees, retirees and their families. With the rising tide, government workers with self-only insurance coverage will pay an average of $5.01 more per pay period, or $130.26 annually and workers with family coverage will pay an average of $11.95 more per pay period, or $310.70 annually, according to the Office of Personnel Management (OPM).

Like much of the other health plans across the country, OPM attributes the rise in health-care costs to increased costs for prescription drugs, greater use of medical services and an aging workforce. However, unlike many other health-care costs OPM Director Kay Coles James points out that the increase is relatively low.

“Even with nationwide reports citing health insurance premium increases ranging as high as 18%, OPM has been able to keep its average premium increase at 10.6%, making many choices in the consumer and market-driven FEHB [program] among the most reasonably priced in the nation,” James said.

The difference though is that federal employees are likely to feel more of the pinch from rising costs. Where many large employers in the public and private sector contribute between 85% and 100% of the premiums for their employees, the federal government pays only 70% of its employees’ health-care premiums.

OPM will post the 2004 premium rates on its Web site at http://www.opm.gov/insure/health/index.asp .