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Washington, D.C.—In a candid assessment of the impact of sharply rising health care premiums, the leader of the nation’s largest independent union of federal workers today told Congress that not only are rising costs making health coverage “prohibitively expensive” for some federal employees, they are a key factor in making jobs in the federal sector “unattractive to prospective employees.”

President Colleen M. Kelley of the National Treasury Employees Union (NTEU) offered this assessment in testimony to the House Civil Service Subcommittee in light of the announced average 13 percent rate increase in 2002 for Federal Employee Health Benefit (FEHB) Plan participants. FEHB is the nation’s largest employer-sponsored health insurance plan, providing coverage for some nine million federal employees, retirees and their families.

Kelley told the subcommittee that all federal employees and retirees are “understandably alarmed” over the “dramatic premium increases they have been faced with in recent years,” noting that such increases averaged 10.5 percent in the current year, 9.3 percent in 2000 and 9.5 percent in 1999.

The NTEU president was particularly critical of a 20 percent increase in 2002 for employees choosing Blue Cross/Blue Shield Standard Option Single coverage. The BC/BS Standard Option is the FEHB’s largest plan, and premiums for its family option have risen 43 percent since 1998—a period during which federal salaries have increased by only 13 percent. The 2002 increase in the Blue Cross Standard Option Family coverage means that premiums for this insurance will have risen 60 percent in that time period. “It is easy to see why federal employees find the FEHB increasingly unaffordable,” she told the subcommittee.

She also criticized the failure of the federal government to use FEHB’s size and potential marketing impact to obtain better rates from insurance carriers and health care providers. “We must examine why our insurance premiums are increasing at a higher rate than those of other large employers,” Kelley said.

The NTEU president cited the Kaiser Family Foundation employer health benefits annual survey as showing an average increase of 10.8 percent in health care premiums in firms with more than 5,000 employees, compared to FEHB’s 13 percent average, a trend that continued the results shown in the foundation’s survey for 2000 when increases at such firms averaged 7.1 percent compared to FEHB’s 10.5 percent.

Moreover, Kelley said, there is a “sharp contrast” between the share paid by private employers—generally at least 80 percent of the premium, but ranging as high as 90 or even 100 percent—and the 72 percent of FEHB premiums paid by the federal government.

Kelley said that, when asked, private sector employers most often cite recruitment and retention of employees as “one of the main reasons” they continue to absorb the lion’s share of health insurance premiums for their employees.

To help the federal government compete, Kelley called again for passage of H.R. 1307, bipartisan legislation introduced by Rep. Steny Hoyer (D-MD), that would raise the government’s share to 80 percent. Passage would be “an important first step” in making the federal government an employer of choice, she said.

“Without competitive pay and benefits, the federal government will never to be able to compete effectively for the talent it needs,” the NTEU leader told the subcommittee.

NTEU represents some 150,000 employees in 25 agencies and departments.