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Why did federal health-care costs increase?

By Ed O'Keefe


VIDEO | Office of Personnel Management Director John Berry explains why health-care premiums will increase next year for federal workers and retirees. (Video by Ed O'Keefe)

Health insurance premiums for federal workers will increase next year, but would have been higher if not for the government's bargaining power, the Obama administration's personnel chief said Monday.

The government announced Friday (without the fanfare of other years) that health care costs for federal workers will increase at a far greater rate than their pay next year, but still at rates less than the premiums of many private-sector workers.

Average increases for the Federal Employee Health Benefits Program will be 7.2 percent, significantly more than the anticipated 1.4 percent pay raise in 2011.

"The rates are actually much lower than our counterparts in the private sector," Office of Personnel Management Director John Berry said Monday in his first comments about the rate increases. (See the video above.) "You also have to factor in that we're providing three [new] benefits this year, so we're increasing the benefits while our rate increase is lower than it is in the private sector." (OPM said Friday that premiums for private-sector plans are expected to rise between 8.9 percent and 10.5 percent.)

FEHBP for the first time will cover the children of enrollees up to age 26, will fully cover the costs of preventive care services and fully cover tobacco cessation classes, Berry said.

"Look, I wish there were no increase -- so does everybody -- but the fact of the matter is health-care costs are still going up around the country," Berry said. "The fact that they're going up less is a good sign for our employees, and I think it's a testament to the quality of the staff we have at the Office of Personnel Management who negotiate those rates with the private sector. They did a great job, and I'm extremely proud of them and I think you know, I'm going to encourage them to stay in there and keep doing it so that we keep getting the best bargain we can for our employees and our retirees."

FEHBP is the nation's largest employer-sponsored health insurance program, covering about 8 million people, including 2.2 million active federal workers, 1.9 million federal retirees, their spouses and dependents.

What do you think of the rate increases? Are they too generous, or too expensive for you and your family? Leave your thoughts in the comments section below

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By Ed O'Keefe  | October 4, 2010; 1:49 PM ET
Categories:  Health Care, Workplace Issues  
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Comments

The Washington Post must be thrilled with the increased non-affordability of health insurance. This will make the welfare like health care, that they and their socialist management love so much, more salable.

Posted by: BigDogou812 | October 4, 2010 2:15 PM | Report abuse

"The Washington Post must be thrilled with the increased non-affordability of health insurance."

Are you thrilled with it? What's your prescription for bringing costs down in the long run? Please enlighten us.

Posted by: ezcheese81 | October 4, 2010 2:19 PM | Report abuse

My agency told me I have to pay extra to cover my 22 year old and that it would probably cost me more under the federal program than a private plan. So how could that factor in at all, unless my agency doesn't understand what's happening?!

Posted by: moore_te | October 4, 2010 2:21 PM | Report abuse

He isn't very good at public relations is he?

At least he didn't say it was all Bush's fault.

Posted by: 54465446 | October 4, 2010 2:27 PM | Report abuse

Why doesn't the govt plan have a spouse-only option? This discriminates against older employees who don't have children.

Posted by: Jimmy371 | October 4, 2010 2:34 PM | Report abuse

Obama's policies are just pathetic. He sold the country a pack of lies. He'll get what he deserves in 2012: life back in the private sector.

Posted by: WashingtonDame | October 4, 2010 2:34 PM | Report abuse

Now we understand why health insurance stock prices have been soaring since the passage of Obamacare.
Yet another betrayal of the public trust.

Posted by: mtpeaks | October 4, 2010 2:45 PM | Report abuse

Obama's policies are just pathetic. He sold the country a pack of lies. He'll get what he deserves in 2012: life back in the private sector.

Posted by: WashingtonDame | October 4, 2010 2:34 PM | Report abuse
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Not so. He and his family will be paid and treated like they are the royal family for the rest of their lives. That's pathetic!

Posted by: gunnysgt77 | October 4, 2010 2:49 PM | Report abuse

As a federal retiree, the federal health plan structure provides little incentive for me to consume fewer health care resources. But the designers of the hew health care law didn't know any better either. I could go into a whole litany of structural problems about both but plenty of others have raised these issues. I just do not think this administration is very competent.

Posted by: cossack2 | October 4, 2010 2:51 PM | Report abuse

it'a a shame obama will get presidetial health insurance for life at our expense...
when did we elect a king entitled to all these benefits for life...
it's time for a change...
the presidentcy should be like being a ceo, once done you are out...

Posted by: DwightCollins | October 4, 2010 3:09 PM | Report abuse

seems to me the real question is why feds stay with expensive plans like the blues and don't migrate to lower-cost plans with comparable benefits. my apwu premium is flat for the third consecutive year in a row and actually $10 month lower than four years ago. as long as workers stay with the expensive plans, there's little reason for them to moderate costs. one might say if folks insist on acting like indifferent consumers, at best, they'll probably end up being treated that way.

Posted by: jimjaf | October 4, 2010 3:18 PM | Report abuse

This is just the beginning of the march towards socialized medicine. Wait until gay partners are covered and we all have to pay for their lifestyle-driven illnesses.
Obama's learing you can't fool all the people all the time.

Posted by: RitaSantaFe | October 4, 2010 3:20 PM | Report abuse

The reason given for so many insurance increases has been that they now need to cover "pre-existing conditions".

All the federal plans already required that!

Now, they're telling us that the reason to increase federal plan costs is the need to cover employee and retiree's adult children ~ yet, we have been told for years that it was the young adults who weren't covered who were making insurance more expensive for the rest of us (because they weren't paying)

So, which is the real reason ~ what about HIGHER ADMINISTRATIVE COSTS due to ineffective and incompetent top level federal government appointees who don't know what they are doing?

I think that sounds about right. In my many years working for the federal government I could not help but notice when a somebody incompetent had gotten appointed ~ agency costs went though the roof in areas where ordinarily no costs ever increased.

Obama has not been able to attract talent. Best bet here is that medical costs in the federal workforce, and consequental medical insurance costs, can be reduced if ALL the Obama appointees are sacked!~

No, don't replace them. Not one of these guys has a job that can't be done by a career person far better!

Posted by: muawiyah | October 4, 2010 3:20 PM | Report abuse

I have the FEHP self only. Lets say I pay $100/mo. The family plan costs approx. $225/mo (that is $100 ea for the self/spouse and approx. $25 for Kid #1. So Kid #1 is being subsidized by the other members in the plan, not to mention if their is a Kid #2, #3 etc. are being ENTIRELY subsidized by the other plan members, this is not fair. Each additional child should have to pay additional. Also remember that teachers and other union members do not pay not one penny increase each year for their premium medical insurance premiums. No wonder they love obamie.

Posted by: mightyheidi | October 4, 2010 3:23 PM | Report abuse

There will be continued large increases in health care insurance premiums in future years as this is Obama's payoff to the insurance companies for supporting his plan for the American people. Why doesn't the health care law put a cap on increases so the CEOs don't take home multimillion dollar bonuses.

Posted by: darwinist1 | October 4, 2010 3:24 PM | Report abuse

It's amazing the complainers here are always trying to blame President Obama for the rise in costs. Maybe you should blame the private insurers that the republicans are always trying to protect. Also, all of you would never stand for your own pay not to increase, so why should health care provider/workers keep theirs the same. Also, none of you are offering any solutions, only complaints. At least now the insurers cant drop you or your children when they feel like it, or tell you that you are to ill for them to pay your health related bills after you have paid your premiums all these years.

Additionally, none of you people have complained now or in the past about the previous presidents getting benefits after they leave office. The US has four living former presidents, each with a spouse, and two former first ladies that are still living. I wonder why you(complainers) never mention the benefits these former officials are receiving. Your true selves is showing.

Posted by: DCDCSW | October 4, 2010 3:28 PM | Report abuse

I have been a federal worker for more than 33 years and do not have children. I was shocked to read that the FEHB program is now covering children that are married. What on earth is up with that? I think it past time that the FEHB offer a self plus 1 option as I am clearly paying for many more children than I care for.

Posted by: jthiker | October 4, 2010 3:35 PM | Report abuse

If Berry worked for me I would send him back to the drawing boards. We are paying FEHBP persons who should know the exact breakout of the cost increases on a per person per item basis but we don't. His silly justifications why benefits are increasing has no accompanying actuarial screen justifying and explaining his perspective. What is the cost for these benefits on a per benefit basis? Just how hard did OPM bargain for us? He's proud but should we, the payers for all these benefits be proud as well? On what basis? Year after year, season after season we pay more and get less. My visits to the doctors office costs have gone up from $20 to $30. Mr. Berry that is an increase in our health care not seen in my premiums. It seems to me BC/BS pays less and less of the doctor's billed costs. This is not seen in your increased premiums either, so the real costs to feds is not the stated increase every year in premiums but in fact more. So we are being squeezed from both ends. Less health care for the dollar and higher premiums as well. I know some feds buying Medicare Part B because they do not think their federal heath care insurance covers them adequately.

Given the desperately ridiculous and unfair Obama health care plan and all the cockeyed deals made to health care corporations and in the financing of the bill for the sake of getting the bill passed, did OPM use that as a template for allowing corporations to help themselves to more of our retirement checks to the tune averaging over 7%?

We need a legislatively directed retirement career employees oversight committee specifically empowered to monitor and direct OPM's actions as all we retirees now get is the bill for the expensive end product without being able to affect the process or even understand what is going on. We have no opportunity to not add benefits. If Berry or congress wants benefits extended for 'children' (age 26!)we should be able to vote on it and say no -perhaps (wild idea I know) let their parents pay for it. What's next, benefits for manicures and computer addictions? If someone wants to quit smoking let them pay for it, not the rest of the non smoking retirees. So its supposed to reduce premiums because a non smoker will be sick less often? Bet we never see that 'benefit' in reduced premiums!

Posted by: absiebert2 | October 4, 2010 3:45 PM | Report abuse

The rate increases are going to happen until we push get a healthier society as a whole. Federal workers and their families should do everything in their power to implement preventative measures stop poor heath. Federal workers as a group should push for options in the system as some have suggested to better tailor the benefits offered to the needs of the federal workforce and priced accordingly. Insurance by its very structure generally has some people paying more than others and getting less service, but there should be better analysis in order to have balance in the system. The federal system should use its weight to push insurers for a deal better than they are currently getting. If federal workers would push together as one body on this issue, instead of trying to blame someone, individually, we might achieve more progress.

Posted by: DCDCSW | October 4, 2010 3:47 PM | Report abuse

This is predictable. How could you cover pre-existing conditions which cost a lot of money and raising dependent age to 26.The higher premiums will result in employers to just pay the much cheaper fine than cover with health insurance. The employees would also only be able to afford medicaid insurance and will result in the bankruptcy of private health insurance companies.This is the plan B of the public option. 50 % of Doctors would retire early or leave the US. With fewer doctors and 30 million more illegal aliens,and non-working lazy people covered,with no more money because of the $14 trillion debt, the gov't would force the remaining doctors to be salaried as it happened in England which is now considering going back to private health insurance.Rationing will follow,years of long waits for PCP appointments and elective surgeries,denial of treatment for advanced very expensive to treat diseases and denial of using expensive life- prolonging drugs, people would realize OBAMA's COMPLETE INCOMPETENCE WHICH WOULD BE TOO LATE BY THEN.

Posted by: mahalapril | October 4, 2010 4:03 PM | Report abuse

For those of us living with serious medical conditions (in my family of 3, there are 3 of us), even federal health insurance has so many copays our ends don't meet. So that, coupled with the rising premiums puts us closer to running out of food before each pay day.
We know we're lucky it's not worse, like so many people out there that don't have it as "good." But at the same time, when your health care copays (not to mention premiums) eat up all the income you'd be saving- it is scary.
That said, I don't forget all those who have no insurance (or bare bones insurance) and no money to pay to use medical services. The stories of diabetics re-using insulin syrings and people with psychotic disorders running out of medications because they can't refill them...
This is why I keep praying that health will be one of our guaranteed rights here in the beautiful United States of America.

Posted by: CarolEE2 | October 4, 2010 4:16 PM | Report abuse

DCDCSW ~ where have you been the last 30 years or so?

This is about the FEHB plans, not the stuff you civilians get ~ we've had the NO REJECTION FOR PREVIOUS CONDITION standard for many years.

The change in the law did nothing FOR us, but it sure seems to be raising our rates anyway.

As far as Republicans owning our health plans, I use KAISER ~ a nonprofit, and many of the other plans available to federales are also nonprofit.

So, where are the Republicans?

I think you should make your posts in this sort of thread consistent with the reality of the topic.

As you may well have noted after my post the IRONY of the situation is that our boys who were writing the legislation (yes, most of those guys doing the text are federal employees) FAILED for the first time in a long time to PROTECT us from their nonsense.

This is outrageous.

They must be keelhauled Fur Shur ~ just give me their names eh!

Somebody else, bring your yacht and we'll have some fun.

Posted by: muawiyah | October 4, 2010 5:27 PM | Report abuse

Well... have any questions or analysis been done anywhere on the profit margin for the health care industry. And who benefits from this? Republicans or Democrats?

It has happened before, just like the gas industry and gas prices – A new or changing environment can present a chance to do price gouging, businesses at times will to protect themselves and their profit margin.

I have always felt that Obama's health care plans are no plans at all - only expansion of who gets health care. What is truly missing is a multiple year health care modeling plan to develop the best systems possible for the various environments (rural, cities, towns etc) and find out what really works - and where.

It is my opinion that what the real issue at hand is... that our political parties continue at times to put their battles for power and control in front of doing what is best to care for the needs of the people. This is difficult not to do on such a complex issue - but a continuous bipartisan extra effort is needed from everyone. Health care needs a plan and a strategy – not just reform.

We still can learn from our mistakes and make changes for the better. We must.
We can roll up our sleeves and work together. We need to face the music that a bipartisan effort from our hearts is what has made America what it is today, what keeps us strong and what America is all about.

Posted by: FRGasper | October 4, 2010 6:19 PM | Report abuse

The FEHBP said they had to raise their fee this year because they were giving us three new benefits: (1) they are covering children up to age 26 (we have no such children) (2) they will cover preventive care (such as?) and (3) they will cover tobacco cessation plans (we do not smoke). So, where is the benefit to us?

Posted by: jsy592 | October 4, 2010 10:17 PM | Report abuse

I've only been a federal worker for the past year, and I'd like to know where that fabulous health insurance is, under FEHB. I've got the so-called 'top' insurance plan from BC/BS, and it sucks compared to what I used to have in the private sector: Doesn't cover near as much as my private insurance did, costs me more, and now premiums go up more quickly. I can't make use of any of the new benefits either; meantime, my costs are skyrocketing. Federal negotiating power indeed.

Posted by: --sg | October 5, 2010 4:12 AM | Report abuse


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Posted by: rebecatoby05 | October 5, 2010 5:46 AM | Report abuse

My insurance went up over 40% this year and will increase another 30% next year. Where's the equity in that? I fully support a self plus one option like we have for the dental and vision insurance.

Posted by: notamused2 | October 5, 2010 8:39 AM | Report abuse

The whole point of healthcare reform was to cover the 30 million Americans without insurance. Anything else is just frosting. Those of you who are saying things like "it isn't a benifit to me" or "why should I have to pay for someone elses children" or "I don't want to pay for someone elses life style..." For shame! How very Christian of you. I'm generally not one to quote scripture but Jesus said that "whatsoever you do even unto the least of these my brothers, you do unto me." I'm perfectly happy to pay more to cover everyone.

Posted by: pishposh1 | October 5, 2010 8:55 AM | Report abuse

This is what we all knew would happen. Obamacare is a fraud, and will continue to cost the taxpayer more and more. Those who don't pay taxes, of course, will benefit the most...taxpayers pay for them anyway.

So, let's give the "other" party a chance in the 2011 Congress to straighten out this mess. The Health Care bill can be fixed to benefit all taxpayers/individuals, without padding the profits of the insurance companies and lobbyists.

Also, tell Obama to take a hike in 2012.

Posted by: david_5570 | October 5, 2010 9:22 AM | Report abuse

Obamacare just kicked in a week ago and people are whining when in fact health insurance plans cost more every year . It's nothing new . Are you naysayers just Teabaggers or just plain knuckleheads .

Posted by: johnsus | October 5, 2010 9:48 AM | Report abuse

Oh great, my plan goes up about 33% of my upcoming raise. Meanwhile, I'm required to have a "family" plan even though only me and my wife participate! AND, the plan now covers my co-workers unemployed children who work as bartenders, waiters, and other various jobs while knocking down $300 a night in tips (under the table). I have to listen to them boast about the money their kids make (tax free) while i quietly pay for them to have health insurance. And of course they only work "part time" so the employer is not required to cover them or offer health insurance. Now I'm also subsidizing their employers. WHAT A COUNTRY!

Posted by: bozoshoes | October 5, 2010 10:58 AM | Report abuse

He needs Robert Gibbs to do his petulant child act and tell us that we should be grateful to pay more for our healthcare!

Posted by: 54465446 | October 5, 2010 11:09 AM | Report abuse

Dear Pishposh1,

I also am in agreement with you on "being my brothers keeper" HOWEVER, when the kids ride by in a brand new Camaro or walk in the building sporting their latest $1000 tattoo, I get a little bitter. Just a little. But I guess it is easier for some folks to "whistle past the graveyard". Wait until you go to the specialist and find a $40 co-pay this time in addition to your higher premium.

Posted by: bozoshoes | October 5, 2010 11:20 AM | Report abuse

I haven't run any individual analysis, but overall my FEHBP premiums have gone up every year for at least the past 5 years. And anyone who expected otherwise, health care reform or no, was obviously impaired.

Posted by: teejackson_93 | October 5, 2010 12:05 PM | Report abuse

Health care reform will not take place until the Administration, Congress and lobbyists for the medical arena consider what's best for the nation and not for themselves. OPM's Berry said it best, "...health care costs are still going up around the country." That's the problem. The Administration and Congress accept the fact that health care costs continue to increase. Why not manage those costs instead of restricting my chances to be healthy and get proper care when needed? I don't smoke. I don't have children. Some big help these new additions are to me. The insurance companies will benefit from my increased payments for treatments I won't ever need.

Posted by: jchallock | October 5, 2010 12:32 PM | Report abuse

pishposh1:

I need a car, will you buy me one? If you say NO, I will tell you, "How un-Christian of you!" I need that car, I deserve that car, I have a right to that car.

Pishposh, you are as your name states, pissposh, and I didn't misspell it.

Posted by: papamckie | October 5, 2010 12:34 PM | Report abuse

They should go up even more. Those in the private sector have been subsidizing the low federal employee premiums for far too long. Stop whining and adjust to the new reality.

Posted by: Tess6 | October 5, 2010 12:35 PM | Report abuse

Tess6 wrote:

"They should go up even more. Those in the private sector have been subsidizing the low federal employee premiums for far too long. Stop whining and adjust to the new reality."

Interesting lack of knowledge. All FEHB members pay a substantial portion of their premium. Most private sectors employees at major companies do not.

Posted by: 54465446 | October 5, 2010 3:56 PM | Report abuse

I’ll be the single person who blames the Bush Administration for the current high costs of federal medical care. The Obama Administration has done nothing to end the outrageous costs hike allowed by the Bush Administration over its 8 years.

The government (OPM) is supposed to be negotiating the “best deals” for the government work force, dependents and retirees. The US government has the “power” of negotiating for in excess of 2 million people, so we should have been getting the best prices all around.

Look at what you paid in 2000 for health insurance. Look at the premium, your co-pay for your primary care physician and then for a visit to a specialist and your deductable.

Then look at what you began paying in 20009. For those with Blue Cross/Blue Shield, you saw your premiums more than double. More costs were pasted along with ever increasing co-pays and higher deductibles. It was like the Bush Administration found the village idiot and then he (or she) did the negotiations). I don’t think they gave a damn about negotiating with the insurance companies. If there are any records to be found (unlikely), I’ll wager the administration simply went along with what the insurance companies wanted. If the Bush Administration allowed the prescription plan for Medicare to be funded at full retail prices (while VA and the military negotiate for pennies on the dollar) do you think they gave a hoot about federal employee health care costs when weighed against insurance company profits?

OPM has no motivation to really negotiate health care costs. I doubt if the folks who are doing the negotiation have the expertise or the drive to hold the insurance companies feet to the fire. The devil is in the details and once we find what hidden costs are now to be paid for out of pocket, we will see at least double digit increases.

I found some interesting information concerning Los Angeles city employees and their health insurance. The city of LA employs about 22,000 workers (which would translate to coverage for perhaps 150,000). There is a huge controversy taking place because one union negotiated a new health care cost with the city. Union members will now pay 5% of their monthly health care premiums (up from 0) and their co-pays will rise to $20.00. Civilian city workers who rely on Kaiser Permanente currently pay nothing toward their premiums.

I’d like to see what kind of health plan costs LA has. You would think they would be considerably higher given the smaller numbers. However, I’ll wager that the city negotiates much better prices and benefits since they have paid (up to now) 100% of the costs.

I would also wager that if the federal government were picking up all the health care costs (instead of 70% (or less as you add in deductibles and co-pays), there would be some real hard ball negotiating. Couldn’t OPM do us better on the 30% portion (more when you look at the deductibles) that we pay? Does anyone really care?

Posted by: highexpectations | October 5, 2010 5:51 PM | Report abuse

Thank you Mr. Obama...we've got a 2-part present for you...one this Nov. and the other in 2012.

Posted by: snowbucks | October 6, 2010 9:35 AM | Report abuse

Last year premiums went up over 8%. This year 7.2%. The real cost-cutting measures of the Health Care law take effect Jan. 1, 2011. Insurance companies must spend at least 85% of collected premiums on actual health care, which limits the amount of profit they can make. Money left over will be refunded to policy holders. We need to give this new legislation a chance to work.

Posted by: Dkydali | October 7, 2010 4:58 PM | Report abuse

The posts and article are thought provoking. If everyone participates, then the cost will balance out. This is the beginnning. Though there will be bumps in the road, we have a responsibility to each other. I think this is the right path to follow... Just as everyone has a right to education and justice, we all have a right to healthcare. The increase in deductibles may be small when compared with bankruptcy or loss of a loved one because of an illness.

Posted by: mw22 | October 11, 2010 9:57 PM | Report abuse

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