Federal health plan premiums to rise 1.8% in 2007

WASHINGTON--In yet another sign that once-soaring health insurance premium increases are easing, premiums for health plans covering federal employees and retirees will rise by an average of 1.8% in 2007, the smallest increase in more than a decade, Bush administration officials announced Tuesday.

Next year's average 1.8% increase for the Federal Employees Health Benefits Program--the nation's largest with more than 8 million participants--compares with a 6.6% increase this year, a 7.9% increase in 2005 and a 10.6% increase in 2004.

The Office of Personnel Management, the federal agency that administers the health benefits program, cited several reasons for the moderation of premium increases, including lower-than-expected utilization of services, which in turn allowed the program to reduce reserves.

Next year, 284 plans will be offered to participants, up from 279 this year. Participants will be able to choose among health plans during an open season that runs from Nov. 13 through Dec. 11.

On average, the government pays 71% of the premiums.

The OPM announcement follows the release last week of a survey by Mercer Health & Benefits L.L.C. reporting that respondents expected health premiums to increase, on average, by 5.6% in 2007, down from an average increase of 6.1% in 2005 and 7.5% in 2004.