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Washington, D.C.?The federal government "needs to better utilize" the buying power generated by the size and influence of its health insurance program to help offset continuing sharp increases in health care costs for federal employees, the leader of the largest independent union of federal workers told Congress today.

President Colleen M. Kelley of the National Treasury Employees Union (NTEU) said that if premiums for the Federal Employees Health Benefits Program (FEHBP) continue to rise as they have in recent years, not only will some federal employees and their families "be forced to make the hard choice not to have" health insurance, but the government will continue to lose ground to the public sector as an employer of choice.

FEHBP is the largest employer?sponsored health insurance plan in the nation, providing coverage for some nine million federal employees, retirees and their families. The average premium for the hundreds of plans in FEHBP has risen sharply in recent years, including an average 9.3 percent increase for this year, Kelley said.

The NTEU president told a hearing of the House Subcommittee on Civil Service of the Committee on Government Reform that FEHBP has the kind of buying power that could make an "enormous" difference in such vital areas as the cost of prescription drugs.

NTEU, she said, is hoping to work with Congress and the administration "in an effort to eventually permit all eligible FEHBP providers to purchase [discount] drugs" from the Federal Supply Schedule. Eligible FEHBP insurers already purchase other products and supplies from the Schedule for use with their federal health plans.

A large insurer made such a proposal for use in its mail order drug program, with a promise to pass savings along to both the government and its health plan enrollees, Kelley said. But while the Office of Personnel Management (OPM) has approved the idea, it has not yet gained the approval of the Office of Management and Budget (OMB), she added.

The union president also said that while NTEU supports the concept of using FEHBP's buying power to negotiate separately for certain benefits with a nationwide carrier?such as for dental benefits?the union "will strongly oppose any effort to carve out any current FEHBP benefit and remove the current government contribution" toward payment for that benefit.

That would "not only be an abdication of the government's responsibility" toward its employees, "it would be counterproductive" to recruitment and retention efforts, she said.

Kelley also repeated NTEU's continuing opposition to the inclusion of Medical Savings Accounts (MSAs) in the FEHBP, a move she said that "has the potential to add dramatic costs" to the federal health insurance program. "In a short time frame," she said, "premiums for those remaining in FEHBP's traditional plans, primarily the older and less healthy, could skyrocket."

At the same time, the NTEU leader reiterated the union's support for making available to more federal employees, effective October 1, Premium Conversion Plans (PCPs), which permit employee health insurance premiums to be paid with pre?tax dollars. These plans "will help reduce the out?of?pocket cost of health insurance for federal employees," she said, and are "another step toward improving the government's ability to compete" in a tight labor market.

The reason for the disturbing trend, President Colleen M. Kelley of the National Treasury Employees Union (NTEU) told a Senate Subcommittee, is that the federal compensation package ?including the critical elements of pay, retirement and health benefits?lags farther and farther behind the private sector.

"Federal employees, just like their private sector counterparts, must believe that substantial rewards exist for excellence and productivity," Kelley told the Subcommittee on Government Management of the Senate Committee on Governmental Affairs.

Without appropriate compensation and incentives, she said, the federal government "will find it increasingly difficult to remain competitive" with private employers.

The NTEU president cited studies, including one by the government's General Accounting Office (GAO) going back to 1994, and more recent analyses by Harvard's John F. Kennedy School of Government and the George Washington University public administration department, showing lagging interest in employment with the federal government.

The single most important and pressing step, she said, would be "a decision to fully implement" the 1994 Federal Employees Pay Comparability Act (FEPCA), which called for the closing, in stages over 10 years, of the public?private pay gap. "That would do more to address recruitment and retention in the federal government than all remaining incentive programs combined," she said.

Since its enactment, however, no annual federal pay raise has been even close to the level called for under the FEPCA formula, and the pay gap continues to be sizeable, she said.

Beyond implementing FEPCA, Kelley said, Congress needs to "provide adequate discretionary funding" to agencies to allow them to implement various programs in existing law, including recruitment, retention and relocation bonuses and awards programs recognizing various aspects of excellence in performance.

"Agencies simply do not have the resources to adequately fund these important incentives," she said. "They are constantly forced to rob Peter to pay Paul."

The union leader urged more federal sector use of "family?friendly programs" such as alternative work schedules, telecommuting options, flexiplace, leave banks, child care subsidies and the chance to use personal sick leave to care for ill family members.

"These benefits provide a sense of community both inside and outside the office," she said, emphasizing the positive impact on agency performance of reduced absenteeism, increased morale and motivation and higher rates of employee retention.

NTEU represents some 155,000 employees in 24 agencies and departments, and has long been the leader in the fight for higher pay and a broader range of benefits for federal employees.