Federal Employees Health Benefits Program: Premiums Continue to Rise, but Rate of Growth Has Recently Slowed Page: 4 of 15
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them with premium data from the California Public Employees'
Retirement System (CalPERS)-the second largest public purchaser of
employee health benefits-and surveys of multiple employer-sponsored
health plans from Kaiser Family Foundation/Health Research and
Educational Trust (Kaiser/HRET).5 To identify factors contributing to
average FEHBP premium growth trends across all FEHBP plans, we
analyzed OPM summary reports assessing the effect of projected changes
in various factors, including the cost and utilization of services, enrollee
demographics, and use of reserves, on premium growth trends from 2000
through 2007.6 We also examined aggregate data on the actual growth in
per-enrollee expenditures from 2003 through 2005 for 5 large FEHBP
plans.' We explored with officials from OPM and 14 selected FEHBP plans
the potential effect on premium growth of the retiree drug subsidy if OPM
had applied for the subsidy and used it to mitigate premium growth. The
14 plans were selected because of size (at least 5,000 enrollees) and length
of participation in the FEHBP (at least 3 years). To examine the reasons
for differing premium growth trends among FEHBP plans, we conducted
interviews with officials from these 14 plans. Eight of the plans had higher-
than-average premium growth, and six of the plans had lower-than-average
premium growth for either (a) 2006 or (b) the 3-year period from 2004
through 2006. A detailed explanation of our scope and methodology is
contained in appendix I of the December 2006 report. We conducted our
work for that report from January 2006 through December 2006 in
accordance with generally accepted government auditing standards.
In summary, we found that growth in average FEHBP premiums recently
slowed from a peak of 12.9 percent for 2002 to 1.8 percent for 2007. This
5Kaiser/HRET has conducted surveys of employer-sponsored health benefits since 1999.
These surveys capture data from employers ranging in size from 3 to 300,000 or more
workers. KPMG Peat Marwick conducted the surveys before 1999. We analyzed premium
growth trends for CalPERS from 1994 through 2007. We analyzed premium growth trends
for Kaiser/HRET surveyed employers from 1994 through 2006, because the Kaiser/HRET
survey data available when we prepared our December 2006 report did not include growth
rates for 2007.
6Premium rates for each year are prospectively set by individual FEHBP plans based on
their projections of growth for various factors. OPM calculates the average premium
growth across all FEHBP plans and estimates the composite projected growth in each of
these factors across all FEHBP plans based on the plans' projections. Actual growth for
each factor may differ from these projections.
7OPM was not able to provide these data for all FEHBP plans for 2005. These 5 plans
accounted for about 90 percent of fee-for-service enrollment and about 67 percent of total
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United States. Government Accountability Office. Federal Employees Health Benefits Program: Premiums Continue to Rise, but Rate of Growth Has Recently Slowed, text, May 18, 2007; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc291002/m1/4/: accessed January 21, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.