FOR IMMEDIATE RELEASE December 12, 2002

Contact: Eldon Girdner (202) 606-2402

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OPM Deputy Director Blair Testifies Before Congress on OPM
Strategy to Maintain FEHB Quality - Contain Costs

Washington, D.C. - Dan G. Blair, Deputy Director of the Office of Personnel Management (OPM) testified before a U.S. House of Representatives Committee about the strategy implemented by OPM Director Kay Coles James to maintain quality through competition while simultaneously constraining costs in the Federal Employees Health Benefits (FEHB) program.

Blair outlined the four point strategy which resulted in premium increases well below nationwide trends, "Director James…warned [carriers] that OPM was going to be a demanding partner and challenged them to bring us their best, most innovative proposals. Second, for the first time in OPM history, she met with and directed OPM staff to negotiate hard for quality coverage at the best possible rate. Third, she initiated a comprehensive outside audit to review mandates affecting participating plans over the past decade so we can inform the Congress and the FEHB population about the costs of mandated health care services. Fourth…she has maintained a close and ongoing relationship with the OPM Inspector General and has aggressively supported his efforts to detect and control fraud and cultivate a culture of accountability within the FEHB program at all levels."

For FY2003, average FEHB premiums increased 11.1 percent - four percent below nationwide trends estimated to be around 15 percent. Blair pointed out that every 1 percent increase in premiums costs the taxpayer and participants $240 million. The 4 percent difference from nationwide premium trends translated into an estimated savings of almost a billion dollars.

In addition, Blair observed that many public health plans experienced much steeper increases. CalPers, the second largest employer-purchaser in the country, announced rate increases of up to 25 percent for 2003. In the Washington area, Montgomery County, Maryland raised its premiums by 26 percent.

Blair reaffirmed OPM's commitment to keep premium increases for FY2004 to a minimum. "While an 11.1% average premium increase is small compared to industry trends, it is nevertheless significant and means employees and retirees, as well as the Government, will pay more for health insurance in 2003. Because we understand that we must continue to strengthen our efforts, Director James has added a fifth pillar to her results-oriented strategy for the coming year: consumer education." This year's program reflects cutting-edge industry products which can deliver health insurance protections at an affordable and reasonable cost. Fully informed FEHB consumers will be in a much better position to wisely select the health insurance plan that best fits their individual and family needs."

The Government Reform Subcommittee on Civil Service, Census and Agency Organization is chaired by Rep. Dave Weldon (R-Fla.) who commended OPM for limiting health care mandates innovative options such as Flexible Savings Accounts.

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OPM oversees the federal work force and provides the American public with up-to-date employment information. OPM also supports U.S. agencies with personnel services and policy leadership including staffing tools, guidance on labor-management relations and programs to improve work force performance.