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Washington, D.C.— As federal employees, retirees, and their families face yet another year of double-digit increases in health care costs, NTEU President Colleen M. Kelley called for quick action on pending legislation to raise the share the government pays toward employee health insurance premiums.

NTEU continues to support legislation introduced in both the House and the Senate that would increase the government’s share of FEHPB premiums to an average 80 percent from the current 72 percent. Other large employers, as well as many state and local governments, commonly pay 80 percent or more of their employees’ health care premiums.

Kelley, who is the leader of the nation’s largest independent union of federal employees, was reacting to today’s announcement by the Office of Personnel Management (OPM) of an average 11.1 percent increase in premiums in 2003 for those enrolled in a Federal Employee Health Benefits Plan (FEHBP).

“For the sixth year in a row,” Kelley said, “federal employees will experience astronomical increases in health care costs.” FEHBP is the largest employer-sponsored health care plan in the nation, covering some nine million federal employees, retirees and their families. “Clearly,” Kelley added, “federal workers should not continue to bear the burden of a disproportionate share of sky-high premium increases. Not only does the government need more effectively to use the marketing clout of the largest health care plan in the nation to keep premiums in line but the government also needs to absorb a greater share of the cost of employee premiums.”

Kelley did applaud OPM’s decision, also announced today, to move forward with Flexible Spending Accounts (FSAs) for federal employees. NTEU has long supported the introduction of an FSA program into the federal government’s benefit program. Most recently, Kelley had urged OPM to move ahead with FSAs during a meeting with OPM Director Kay Coles James in February. OPM’s stated goal is to have FSAs available to federal employees by July of 2003.

FSAs, which are common in the private sector, allow employees to deduct specific amounts of money on a pre-tax basis from their salary to be used for out-of-pocket health and dependent care expenses. Under the OPM plan, federal employees initially will be able to set aside up to $3,000 into an FSA for out-of-pocket medical expenses. The limit for dependent care for federal employees will be at the Internal Revenue Service limits, currently $5,000.

The introduction of an FSA program for federal workers moves the government more toward the private-sector model of health care coverage and will offer relief to employees who have seen health care costs rise at a rate that is significantly higher than their pay has increased, Kelley said.

“Both the introduction of FSAs and passage of legislation to increase the government’s share of FEHBP premiums would help the government as it continues to face severe recruitment and retention issues,” Kelley said.

Kelley also reacted strongly to OPM’s decision to allow the American Postal Workers Union (APWU) health plan to offer a new option very similar to Medical Savings Accounts (MSAs). The “customer-driven” option APWU is offering is nothing more than an MSA under a new name, Kelley said. NTEU has long opposed the introduction of MSAs into the federal health plan.

MSAs and similar plans are attractive to younger and healthier individuals because they often reward people for not using health services. However, this would leave retirees and other frequent users of the health system in the FEHBP’s traditional plans which would have to increase costs as their enrollee pool declines.

“In a short time frame,” Kelley said, “premiums for those remaining in traditional plans could skyrocket. Segmenting the federal health program is not in the best interests of federal employees, retirees or their families.”

NTEU represents some 150,000 federal employees in 26 agencies and departments.