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Washington, D.C.—In testimony before a key House subcommittee, the leader of the National Treasury Employees Union (NTEU) today urged the new Congress to move forward on a number of ideas that would improve the Federal Employees Health Benefits Program (FEHB), a step that would in turn help address the government’s serious recruitment and retention problems. Her testimony came at the conclusion of the annual open season, during which federal employees can choose a new health plan.

One of the key steps, NTEU President Colleen M. Kelley told the House Civil Service Subcommittee on Government Reform, would be approval of legislation to increase the government’s share of FEHB premiums from the current average of 72 percent to 80 percent. Bipartisan legislation on this issue introduced in the 107th Congress by Rep. Steny Hoyer (D-MD) was endorsed by 94 House members, she said.

The NTEU leader outlined a list of cost and related problems with FEHB that are adversely affecting federal employees, including among others sharply rising annual premiums, increased copayments and deductibles, limitations on covered services, the loss of participating companies and physicians, and increases in out-of-pocket expenses for prescription drugs.

“To the extent federal employees are finding the FEHBP increasingly unaffordable, and prospective employees are discouraged from seeking employment as a result of the health program’s costs, this is an issue

none of us can afford to ignore,” she told the subcommittee.

President Kelley noted NTEU’s success in working with the previous administration to put in place a mechanism known as premium conversion which allows federal employees to pay their FEHB premiums with pre-tax income, and she urged extension of this program to federal retirees.

At the same time, she urged “favorable consideration” in the next Congress of legislation that would extend a new program of Flexible Spending Accounts (FSAs) to federal retirees as well. NTEU worked with the Bush administration to make FSAs available to current federal workers as early as July 2003.

Under that program, eligible employees set aside a specific amount of money each year to pay certain health care and dependent care expenses on a pre-tax basis. Kelley noted that the savings associated with FSAs “can be considerable,” and said NTEU “strongly supports” extending the program to federal retirees.

She again stressed NTEU’s opposition to adding Medical Savings Accounts (MSAs) or “similar insurance products” to FEHB because of the likelihood that they will siphon from traditional health care plans younger and healthier participants, and lead to likely sharp premium increases for those in the traditional plans. Adding MSAs or similar programs to FEHB would “seem to defy the underlying principle of group health insurance by separating these two groups,” she said.

The NTEU leader also urged the Office of Personnel Management (OPM) “to study the merits” of negotiating discount prescription drug rates for FEHB, noting that three years ago, a proposed program by a small FEHB plan to purchase drugs from the Federal Supply Schedule (FSS) was thwarted by the threat of three major drug companies not to sell drugs to that plan if it was permitted to buy drugs from the FSS.

As the largest independent federal union, NTEU represents more than 150,000 employees in 28 agencies and departments.