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Is switching to a low-cost health plan right for you?

Oct. 28, 2012 - 03:35PM   |  
By STEPHEN LOSEY   |   Comments
A nurse checks a patient's blood pressure.
A nurse checks a patient's blood pressure. (David McNew / Getty Images)

Rising health insurance premiums are driving federal employees to switch from traditional plans to lower-cost options that shift risk from the insurer to the employee.

Enrollment in the Federal Employees Health Benefits Program's three most popular traditional health plans has plunged 15 percent since 2007, with some 359,000 subscribers choosing lower-cost options. At the same time, enrollment in the lower-cost versions of the Blue Cross Blue Shield, Government Employees Health Association (GEHA) and Mail Handlers health care plans has shot up about 135 percent.

“There are roughly two dozen plans [available to most enrollees], the lower cost of which will save the average family over $1,000 per year” on premiums, said Walt Francis, who writes the annual Checkbook health care guide for federal employees.

And in some of the most popular family plans, the annual differences can be even more. A family could save more than $1,600 next year by choosing Blue Cross basic instead of Blue Cross standard. The difference between GEHA's high and standard family plans is nearly $3,000. And Mail Handlers enrollees could save almost $3,400 by switching their family from the standard plan to the value plan.

But while the lower-cost plans offer significantly less-expensive premiums, there is a tradeoff. Those plans charge significantly higher co-insurance rates for out-of-network providers — if they cover out-of-network providers at all. And co-payments or co-insurance rates for in-network providers can be higher — in some cases, significantly so — than those charged by the higher-cost plans.

FEHBP premiums will rise 3.4 percent overall in 2013, the smallest increase since 2008. Francis urged enrollees to take a closer look at their health plans during this year's open season — which runs from Nov. 12 to Dec. 10 — and consider a change.

“Everybody hates to look at their insurance policy,” Francis said. “It's like getting a tooth pulled. But they're missing out on these big savings.”

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And when enrollees choose the cheaper options, FEHBP overall premiums rise less rapidly.

It's not just premium costs driving enrollees to look for cheaper options. Karen Schuler, marketing director for GEHA, said FEHBP enrollees are also increasingly realizing that less-expensive care options also mean lower prices.

Schuler said the main difference between GEHA's high and standard options is that the standard option incentivizes choosing generic drugs. Enrollees in GEHA's standard option pay a $5 co-pay for generics at a retail pharmacy, and co-pays are waived the first time a generic prescription is filled via mail order. They also pay 50 percent of the cost of a brand-name drug. GEHA high enrollees also pay a $5 co-pay for generics, but they pay 25 percent of the cost of brand-name drugs.

Also, widely used brand-name drugs such as Lipitor, used to treat high cholesterol, are coming off patent and becoming available in cheaper generic versions. Schuler said the availability of generics is encouraging more enrollees to consider GEHA's standard option, which became more popular than its high option in 2010.

“If you're someone who takes generics, it's a really good buy,” Schuler said. “So many drugs now are available in generics, it's made it easy for a lot of people to shift over.”

Enrollment in GEHA's standard option doubled from 2007 through 2012, while enrollment in its high option declined 9 percent.

Francis said all FEHBP plans are strongly encouraging enrollees to shift to generics.

Blue Cross Blue Shield, for example, is now posting personalized statements on its members' online accounts when they buy a brand-name drug telling them how much they could have saved by instead buying the generic version.

“We're doing that to show concrete savings,” said Bill Breskin, vice president of government programs for Blue Cross Blue Shield.

Pharmaceutical costs make up about 30 percent of all FEHBP costs, the Office of Personnel Management said last month, meaning the government and enrollees could save a great deal of money if enrollees become more comfortable with generic drugs.

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Breskin said Blue Cross' enrollees have been shifting toward lower-cost plans for years. Blue Cross used to have a high option, but it merged it into the standard option in 2002 because so many enrollees were moving to the standard plan. And now, enrollees are moving in large numbers toward Blue Cross basic: Enrollment jumped 141 percent between 2007 and 2012. At the same time, standard option enrollment fell 13 percent.

“We've seen greater price sensitivity on the part of the federal workforce market,” Breskin said. “Health care costs in this country continue to rise. We tried to address that by providing innovative programs that control the cost of the trend.”

Wellness programs

Health insurance plans have also increased their focus on wellness programs in recent years. They hope that by keeping their enrollees from getting sick in the first place, or helping them manage their conditions, they can keep costs down by not having to treat them.

Breskin said Blue Cross' wellness program encourages enrollees to fill out an online assessment to identify health risks; join a gym and exercise; organize their health records to track blood pressure and other test results, and find a provider.

OPM Director John Berry has also regularly spoken about wanting to improve the overall health and wellness of federal employees, and directed the government's health plans to start offering enrollees incentives to encourage them to take better care of their health.“It's things like case management, encouraging diabetics to take their medication so they don't have to treat them later,” Francis said. FEHBP plans “have OPM standing behind them, like a stern taskmaster.”

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