DOUBLE-DIGIT INCREASES IN HEALTH CARE COSTS FOR FEDERAL EMPLOYEES HIT NEXT WEEK

Underlines Need to Move Bipartisan Bill to Increase Gov’t Share of Premiums

For Immediate Release:

November 6, 2003

Contact:Stacey Farnen
202-225-3130

WASHINGTON – House Democratic Whip Steny Hoyer (MD) released the following statement today regarding the imminent increase in health insurance premiums for federal employees and retirees, which will rise an average of 10.6 percent on Monday, November 10th.  This is the fourth consecutive year of double-digit increases:

“The Office of Personnel Management recently announced that health insurance premiums for federal employees and retirees for the 2004 enrollment period, which begins in four days on November 10th, will increase an average of 10.6 percent, the fourth consecutive year of double-digit increases. 

“Over the past five years, federal employees have seen their health care premiums increase by over 50%, while salary adjustments have been much smaller.  Premiums for the Federal Employees Health Benefits Program (FEHBP) increased 13.3% in 2002, 10.5% in 2001, 9.3% in 2000, 9.5% in 1999, and 7.2% in 1998.

“These sharp increases in health insurance premiums for federal employees and retirees are unacceptable.  They underscore the urgent need for Congress to pass and the president to sign into law H.R. 577, which I introduced earlier this year.  This bipartisan bill would increase the government's average share of FEHBP premiums from 72 percent to 80 percent and help counteract rising health care costs and make it easier for federal employees to afford quality health care. 

“As calculated by the Office of Personnel Management, the average employee would save approximately $509.08 per year under this legislation.

“An added bonus is that H.R. 577 will make the federal government more competitive in the marketplace for skilled employees.  Affordable health benefits have proven one of the best ways for the federal government to recruit and retain quality employees.  At a time when as many as half the federal workforce will be eligible for retirement in the next five years, Congress must take reasonable steps to replenish its ranks with skilled professionals.  This bipartisan bill is one such step.

“Moreover, at a time when Congress is calling on the private sector to provide affordable health care benefits to its workers, it should lead by example.  By increasing the government's share of premiums, H.R. 577 will bring the federal government more in line with what most private and state employers contribute to premiums, which is 83.1% for single health coverage and 76.2% for family coverage, according to the Kaiser Family Foundation.

“Making the government more competitive in the marketplace for employees is more important than ever as federal employees comprise a key part of the frontline of the war on terrorism.”

In 1959, Congress enacted the Federal Employees Health Benefits Program (FEHBP) as a recruitment and retention tool for the federal government to compete in the job market.  For over 40 years, the FEHBP has fulfilled its mission and presently insures over 9 million employees, their dependants, and annuitants.

Unfortunately, the FEHBP has not been immune to sharp healthcare premium increases.  As a result, FEHBP participants are digging deeper and deeper into their pockets to pay for health care.  An aging federal workforce (the average federal employee is now 46), a longer living retiree population and prescription drug costs are primarily driving FEHBP cost increases.

Congressman Hoyer introduced the same legislation in the 107th Congress (H.R. 1307), which 94 other Members of Congress co-sponsored. 

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