WASHINGTON — Health insurance premiums for federal workers and retirees will rise next year by an average of 10.6 percent, which is much less than the increases planned by many private employers, the Bush administration said on Tuesday.
Administration officials said the new rates suggested that the federal employee program was a model for the private sector and for Medicare, the insurance program for people who are elderly or disabled.
The program for federal employees offers a wide range of insurance options through scores of competing private health plans.
The people who run the Federal Employees Health Benefits Program try to obtain lower rates and additional benefits through negotiation and persuasion, with a minimum of mandates and regulation.
Kay Coles James, director of the federal Office of Personnel Management, said the premiums for federal workers and retirees would average $277 every two weeks, or $7,202 a year, in 2004. The government pays slightly more than 70 percent of this amount on the average.
Premiums for health maintenance organizations will increase an average of 9.9 percent next year, while federal workers in fee-for-service plans will see an average increase of 10.7 percent, the government said.
The companies that insure federal employees are usually responsive to suggestions from the government because the federal employee program is one of the largest employer-sponsored health benefit programs in the United states.
It provides health insurance for 8.3 million people — 2.2 million active workers, more than 1.8 million retirees and 4.2 million dependents — at a cost of $26 billion a year. It is available in big cities and rural areas, to White House officials and park rangers alike.
In the private sector, health insurance premiums rose 13.9 percent this year, and many employers expect larger increases next year.
James said the lower increase for federal workers was "a product of tough negotiations."
Robert E. Moffit, director of health policy studies at the conservative Heritage Foundation, said, "The new rates for federal employees show you can have a program that delivers high-quality health care and restrains costs without price controls or thousands of pages of regulations."