October 16, 2001
Magda Lynn Seymour
Diane S. Witiak
(202) 639-6419

Harnage Urges Congress To Bring AFGE To FEHBP Bargaining Table

(WASHINGTON, D.C.)—“The Federal Employees Health Benefits Program (FEHBP) has become a scandal. This year the carriers, led by their Most Valuable Player, Blue Cross/Blue Shield (BCBS), shot for the moon and got it,” says Bobby L. Harnage, National President of the American Federation of Government Employees (AFGE). Harnage’s statement will be provided to the House Government Reform Subcommittee on Civil Service and Agency Organization at a hearing to be held: Tuesday, Oct. 16, 2001, at 1 p.m. in Room 2247 of the Rayburn House Office Building.

Harnage points out that it is a misconception that under the “Fair Share” formula the government pays 72% of premiums. The government pays 72 percent of average premiums and this amount serves as a cap on the dollar amount that agencies pay. There is also a cap on the percentage of premiums that agencies pay (75%). However, there is no cap on either the dollar amount or the percentage of what employees pay. “Thus, in 2002, federal employees will pay a full 30% of the premiums for BCBS’s Standard Option plan,” Harnage states.

The union leader notes that large private sector firms and state governments routinely pay from 80% to 100% of employee premiums and unionized employees in both the public and private sectors are able to have a meaningful voice in the inevitable trade-offs between premium increases and covered benefits. “Yet, OPM insists on making these decisions for us, with no input from employee organizations whatsoever,” Harnage adds.

“OPM has allowed the big plans to segment the FEHBP market so that premiums reflect the risk characteristics of the covered group rather than the value of medical benefit provided,” Harnage explains. “Federal employees, retirees and their dependents are the losers in this game of risk selection and the big plans are the winners. OPM, which should be performing an active role of oversight and control, just throws up its hands.”

“But this year’s move by BCBS and OPM is the worst of all worlds—federal employees lose a comprehensive old plan, gain a new plan with very poor benefits, and costs are higher than straightforward insurance principles indicate they should be,” Harnage says.

“AFGE deserves a seat at the table at the annual negotiations over premiums and benefits in each of FEHBP’s plans. The affordability of FEHBP is a growing problem for both blue collar and white collar federal employees and their families,” Harnage concludes. “What is more, the higher cost of FEHBP is beginning to pose a threat to federal employee’s jobs in cost comparisons under A-76. Federal employees want a voice in decisions that have such a far-reaching and profound effect on their economic well-being.”

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