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Feds flee costliest health plans

25.11.11

Skyrocketing health insurance premiums over the last five years have decisively changed the federal health care landscape.

Since 2007, nearly 300,000 employees and retirees have left the three most popular high-cost health plans. And over the last five years, nearly 500,000 have signed up for the lowest-cost versions of those same plans.

Insurance premium increases — which in 2010 hit a five-year high of 7.4 percent on average —are driving the shift.

"The reason for it is simple: People look for better deals, and oftentimes find them," said Walt Francis, who writes the annual Checkbook health care guide for federal employees. "That's how this program has been working for 50 years. It's greatly reduced costs from what they otherwise would be."

The Office of Personnel Management, which runs FEHBP, said in an e-mail that about 10 percent of active federal employees and 4 percent of retirees change health plans each year — usually selecting a less expensive program. Those shifts help hold down premium costs by about 1 percent, OPM said. Feds in the Washington area, for example, can choose from 27 different plans, and OPM said the wide assortment of choices leads directly to movement among plans.

Source: Federal Times