WASHINGTON – Federal employee unions are responding skeptically to this week’s announcement that new high-deductible insurance plans with health savings accounts will be offered to government workers in 2005.
The plans “will certainly shift more costs” from the government to employees, said Jacque Simon, public policy director for the American Federation of Government Employees. But Simon maintains that federal health plans are already “less generous” than coverage offered by major private corporations.
Health savings accounts have been heavily promoted by President Bush as a way to control health care costs. Enacted last year as an amendment to the Medicare reform law, this is the first opportunity the federal government has had to offer such plans to its workers.
Office of Personnel Management Director Kay Cole James on Monday described the new plans as “a great new idea that will incentivize health care choices . . . and maximize employees’ ability to put their hard-earned dollars to work for themselves.”
James said that of the 249 health insurance options available to workers under the Federal Employee Health Benefits Program next year, 18 will be high-deductible plans with health savings accounts. Two companies, Aetna and Coventry Health Care of Delaware, will offer the plans to federal workers in Maryland.
The Aetna plan, called Aetna HealthFund, combines a yearly deductible of $2,500 for individuals and $5,000 for families with a tax-free health savings account used for out-of-pocket expenses. The account can be applied toward the deductible.
Employers put up other half the money toward the accounts, from employee-paid premiums. Employees can put up the other half in pre-tax dollars, an arrangement that can result in tax savings of several hundred dollars a year, depending on an individual’s salary.
Yearly contributions by employees are capped at $1,250 for individuals and $2,500 for families. Any money not spent at the end of the year can be rolled over and accrued in the account.
All of which, the unions say, makes the plans most attractive to young, healthy, high-income individuals, leaving older, less-healthy workers in traditional health plans, which will then have to raise premiums to cover increased costs.
Colleen M. Kelley, president of the National Treasury Employees Union, also foresees the potential for abuse as employees switch from traditional to high-deductible plans and back again, depending on their anticipated medical costs for the year.
Simon points out that OPM’s high-deductible plans are “highly unusual,” since most plans do not provide for premium contributions to the health savings account.
Tom Bernatavitz, Aetna’s vice president for federal programs, agrees that high-deductible plans with health savings accounts “are not for everyone.” While Aetna’s plan covers 100 percent of preventive care, like yearly checkups and mammograms, it does not cover other basic health care costs: birth control for women, doctor’s appointments for colds or other illnesses, trips to the hospital for broken bones and other emergencies.
One thing everyone agrees on: The long-term impact of health savings accounts on U.S. health care is hard to predict at this point. Aetna recently released a study on first-year results from 13 companies that had adopted its high-deductible plan, either as one of several options or their only health-care plan.
Analyzing claims from 13,500 individuals, the study found a 23 percent increase in employees’ use of preventive care, coupled with an 11 percent decrease in visits to primary care doctors and 5.5 percent drop in pharmacy costs.
Aetna spokeswoman Betsy Sell said the findings were “preliminary” and did not necessarily suggest a direct relation between increased preventive care and the decrease in other costs.
The high-deductible plans were part of an overall federal health insurance plan for 2005 that officials said would see average premium increases of 7.9 percent, the first single-digit increases in five years.
-30- CNS 09-16-04