Washington, DC - U.S. Office of Personnel Management (OPM) Associate Director Nancy Kichak testified today before the Senate Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, on health care premiums and their effect on the Federal Employees Heath Benefits (FEHB) Program. Kichak also discussed initiatives OPM has implemented to provide members of the FEHB Program with top quality health care at reasonable costs.

Discussing the success the Bush Administration has had in containing premium rate increases, Kichak said, "For five consecutive years, rate increases in the FEHB Program - which covers approximately 8 million people - have declined. In fact, for 2007, rates increased only 1.8 percent. The result - approximately 63 percent of FEHB enrollees incurred no premium increase, while another 15 percent saw increases of less than 5 percent. For the past five years, the rate increases were lower than industry averages with the last three years being remarkably lower."

OPM provides FEHB enrollees with choices of quality health care that meet their respective individual and family health care needs at affordable prices. It has taken steps to promote market-based competition by providing a range of quality health care options which include High Deductible Health Plans and Consumer-Driven Health Plans linked to Health Savings Accounts. In addition, for 2007, OPM took steps to enable enrollees to make pre-tax contributions to their Health Savings Accounts through payroll allotment and added other health-related benefits that include Flexible Spending Accounts and stand-alone dental and vision benefits.

"Each year, OPM issues its FEHB ‘Call Letter' to provide guidance and negotiation objectives for benefit proposals from FEHB Program plans for the next contract term," said Kichak. "Over the past several years, the Call Letter has asked carriers to add benefits to their respective coverage options. Those benefits have included coverage for a variety of preventive services such as screenings for osteoporosis, colorectal cancer, abdominal aortic aneurysm, and cholesterol, as well as a variety of adult and childhood immunizations. In addition, we have consistently encouraged carriers to place emphasis on care management programs and practices to address the complex health care needs of FEHB enrollees with chronic conditions."

As part of the annual premium rate negotiation process, OPM exercises its authority to use excess reserves to mitigate premium increases. During this year's Open Season rollout period, OPM allowed FEHB plans to exercise this option to reduce premiums. Usually, better than expected claims experience creates excess reserves and leads individual health plans to propose drawing down reserves in future years.

In closing, Kichak said, "As OPM moves forward, we will continue to seek innovative benefit proposals from FEHB carriers that provide quality, value and affordable health care options. Like many other employers, the federal government has been committed to promoting a healthier workforce through preventive care measures. These measures are responsive to the needs of enrollees and add value to their health care coverage."