FEHB participants will have one or two more insurance plan options

The Office of Personnel Management said participants in the Federal Employee Health Benefits Plan (FEHBP) will soon have a few more choices.

OPM on Friday finalized its decision to allow FEHB carriers to offer the same number and type of insurance plan options.

In the past, OPM set minimum standards that let certain plans offer two options and one high deductible health plan, while other carriers could offer three options of any kind or two options and a high deductible plan. With OPM’s final rule, all FEHB carriers will offer the same number and type of plans, opening up just a few more options to the program’s participants.

FEHB participants will not likely see a vast difference in their options, but OPM projected the new regulations would create two more plan options. The current FEHBP contracts with 83 health plan carriers, which offer about 262 different plan options.

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“OPM expects that this regulatory change allowing an increase in the number of plan options will have a positive effect on the market dynamics in the FEHB program by potentially increasing competition between health plans,” the agency wrote in a final rule. “This regulatory change will allow health plans … to offer a greater variety of lower cost, higher quality options to better serve FEHB program enrollee interests. OPM will ensure that any new options are distinct and meet enrollee interests and that enrollees have access to adequate information to understand the available plan options.”

By OPM’s logic, more insurance plan options will boost competition among carriers in the FEHBP, which will in turn lower health care costs.

OPM has long asked for the authority to add more plans to the FEHBP. The agency can make some changes, like this most recent one, on its own, but others require congressional action.

OPM received comments from individuals and FEHB carriers on this change. Some expressed concern that OPM’s new regulation would, in fact, create more competition.

“OPM considers a competitive environment as one in which all carriers conduct business under the same set of rules, meaning no carrier has the advantage of offering products that another carrier cannot,” the agency wrote in the final rule. “While plan benefits vary, OPM wants all carriers to be able to offer the same number and types of plan options.”

The Government Accountability Office also said it is unclear whether giving OPM greater authority to contract with more insurance carriers would change the federal health insurance program for the better.

Few participants — about 5-to-7 percent, or 18,000 by OPM’s count — change insurance plans during any given year. If given more options, GAO is uncertain participants would seek a change and take advantage of them.

In nearly all parts of the country, FEHB enrollees had more plan options in 2015 than in 2007. But by far, the top three FEHBP carriers still hold a significant share of the federal employee health market, and that share has been growing.

Still, improving the program’s competition, adding more options and increasing affordability is a strategic priority for OPM.

In its most recent letter to FEHB carriers, OPM asked plan providers to consider how they could change existing plans or introduce completely new options to cut costs in future years.

OPM has long sought cost-savings from FEHB carriers, particularly as the plan’s enrolled population has grown older. About 47 percent of the federal workforce is age 50 or older, according to the most recent statistics from OPM.

FEHB premiums have also steadily increased for the past several years. Non-postal employees and annuitants enrolled in the Federal Employee Health Benefits Program are paying, on average, 6.1 percent more toward their premiums this year. Premiums rose an average of 6.2 percent for participants in 2017, and enrollees saw a 6.4 percent increase in 2016.

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