September 21, 2001
Magda Lynn Seymour
Diane S. Witiak
(202) 639-6419

Union Leader Calls BCBS "Gouging and Opportunistic"

(WASHINGTON, D.C.)—Bobby L. Harnage, National President of the American Federation of Government Employees (AFGE), today issued the following statement in response to the Office of Personnel Management's (OPM) announcement concerning the 2002 plans and premium increases for the Federal Employees Health Benefits Program (FEHBP):

"OPM's alleged negotiations with the insurance carriers appears to have been a virtual free-for-all for Blue Cross/Blue Shield (BCBS). As a result, premiums for nearly two million federal employees and retirees who participate in BCBS will go up by a stunning 17% (for family coverage) and 20% (for single coverage).

"This proves my suspicion that we had a 'fox in the hen house' at OPM when it came to dealing with the FEHBP. It is time Congress took control of this situation.

"The peculiarities of the FEPBP financial formula mean that for the second year in a row, the government's overall share for BCBS will go down, forcing employees to pay 30% of BCBS premiums while the government picks up only 70%.

"Replacing BCBS's High Option with a new Basic Option occurred without any input from federal employees, even though AFGE had requested a seat at the table. No federal employee union was permitted to participate in OPM's 'negotiations' with BCBS over this fundamental change to the program. The result, not surprisingly, is a change that creates increased costs for federal employees and government agencies while providing increased profits for BCBS. The federal government will realize no savings at all as a result of the elimination of the most costly plan in the FEHBP.

"If OPM had done its job of protecting the interests of two million federal employees and retirees instead of agreeing to BCBS’s demands to end the High Option plan, premiums in the Standard Option would have risen by 12.5% instead of 15%. But BCBS, accustomed to having its way with OPM, will now receive its cake and eat it too. At the same time, they will establish a new, nationwide plan that will enable BCBS to increase their control over all segments of the FEHBP market.

"The need for federal employees—those who pay 30% of the bill for FEHBP—to have a seat at the table at the annual 'negotiations' between OPM and the insurance companies has never been clearer or more acute. This year marks a new low in OPM's abject capitulation to insurance company demands. The FEHBP continues to deteriorate and insurance companies continue to dictate terms and prices to OPM when it should be the other way around.

"The federal government's human capital crisis demands an improved health insurance program. OPM cannot be permitted to continue giving carte blanche to the Blues. Our nation and our government need all available resources as we prepare for war; in this context BCBS's unbridled greed is opportunistic."

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