Health Insurance to Rise for Federal Workers

Article excerpt

Health insurance premiums for federal employees and retirees will increase an average of 8.5 percent next year, says the Office of Personnel Management.

The 1998 premium increase will reverse four years of stable or declining rates for the more than 9 million workers covered by the government program.

Officials attributed the price hike to higher health care costs and the complex formula that the government uses to calculate premiums for employees. But acting office director Janice Lachance predicted that the 8.5 percent increase "will be significantly lower than the average private-sector increase, as it has been through most of the 1990s." Health care analysts interviewed Friday said they expected to see higher health care premiums in the private sector next year and suggested that the federal employee increase could be viewed as an early signal. "There's a lot of pent-up inflation in the health care market," said Paul Fronstin, a research associate at the Employee Benefit Research Institute here. William J. Falk, a principal at the management and employee benefits consulting firm of Towers Perrin in Chicago, said he expected private sector premiums to rise by 6 percent to 8 percent next year. Nationwide, the Federal Employees Health Benefits Program handles about $18 billion in premium payments each year and offers more than 350 insurance plans, including fee-for-service plans and health maintenance organizations. …