Federal Health Plan Costs to Increase

Following private industry trends, health insurance premiums will increase by an average of 7 percent next year in the health insurance program covering federal employees and retirees, according to the Office of Personnel Management, the administrator of the program.

The 7 percent increase for the Federal Employee Health Benefits Program, which covers about 8 million people, is roughly in line with rate increases that industry experts expect private-sector employers to be hit with next year. For example, Hewitt Associates Inc. is projecting that 2009 premium increases will average 6.4 percent.

Still, the federal program’s 7 percent average premium increase for 2009 is sharply higher than for this year, when premium increases averaged just more than 2 percent.

Government officials attribute next year’s cost increase in large part to greater demand for medical services, higher prescription drug costs and an aging workforce.

In all, 269 health plans will be offered in the federal program next year, though many plans are available in only certain parts of the country.

Federal employees, on average, pay 30 percent of the premium for health care coverage, with the federal government paying the remaining 70 percent.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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