Factors contributing to the 2011 FEHBP premium increases

David Ermer–Uncategorized–

OPM has provided the following breakdown of factors contributing to the FEHBP premium increases:

Factor Gov’t Enrollee Total Change
Average 2010 Biweekly Premium $257.04 $113.89 $370.93
Utilization, Technology & Medical Inflation $18.56 $8.11 $26.67 7.20%
Demographics (Age, Sex, etc.) $0.52 $0.23 $0.74 0.20%
Benefit Changes $1.90 $0.83 $2.73 0.70%
Enrollee Choice (Plan Movement) ($4.34) ($1.89) ($6.23) -1.70%
Reserves, Financing, etc. ($1.33) ($0.58) ($1.92) -0.50%
Other Factors $3.56 $1.55 $5.11 1.40%
Average Biweekly Change $18.86 $8.24 $27.10 7.30%
Average 2011 Biweekly Premium $275.90 $122.13 $398.03

*Totals may not add due to rounding.

While no one likes price increases, the FEHBlog thinks that this breakdown makes the 2011 increase understandable. Considering the FEHB Program’s enrollment (1/2 of the Program enrollment is annuitants, average age of employees is in the late 40s, etc.), it is surprising that the actual increase is lower than the predictions that benefit consultants are making for average premium increases in large employer groups for 2011 (as the FEHBlog has recounted).  That speaks well of OPM, the FEHB plan carriers, and the federal and postal employees and annuitants participating in the Program who clearly work together to control costs.