Health Savings Account Blog

The proposal is drawing opposition from the National Active and Retired Federal Employees Association, which contends that high-deductible plans with health savings accounts tend to siphon younger and wealthier enrollees from traditional plans and make it more difficult for traditional plans to hold down premium increases.

Jackie Fishman, a spokeswoman for Blue Cross Blue Shield, said, "We are watching to see what Congress is going to do and what they will allow us to do." She noted that Blue Cross adjusts its benefit packages "based on sound actuarial information and the value we offer our customers."

The White House has championed high-deductible plans that offer health savings accounts, or HSAs, as a way for consumers to take more control of their spending for medical care. With an HSA, an enrollee makes a tax-deductible contribution to a savings account. The account is used for routine medical costs, tax-free, and the high-deductible plan covers serious illness or injury.

HSAs are available to people who are not enrolled in Medicare and do not have other insurance. Since Treasury Department rules typically exclude retirees, the OPM is offering federal retirees a similar account, called a "health reimbursement arrangement."

The president's fiscal 2007 budget proposed the statutory change so that Blue Cross could offer a third plan to federal employees and retirees. The company offers a fee-for-service standard option and a basic option that requires enrollees to stay in the Blue Cross network.

If approved, the legislation would permit the OPM to follow through on efforts to add high-deductible and consumer-driven plans to the federal employee program. In December 2004, the OPM changed its regulations to foster such plans by allowing companies other than Blue Cross to offer more than two options.

In a letter to congressional leaders, the OPM said the administration estimated that allowing Blue Cross to add a high-deductible plan would save $1.1 billion over five years and $3.4 billion over 10 years in program costs.

Those projected budget savings have drawn some skepticism on Capitol Hill because they assume that large numbers of federal employees will transfer to a Blue Cross high-deductible plan to take advantage of slightly lower premiums or the ability to build up savings for medical expenses in a tax-deferred account.

Nancy H. Kichak , an associate director at the OPM, said the estimated savings were based on Blue Cross's success in drawing enrollees to its basic option, which was introduced in 2002. She noted that Blue Cross's brand name would help the company market HSAs to federal employees and retirees.

Blue Cross has been a popular choice for many federal employees and retirees over the years. It covers about 60 percent of the enrollees and families in the Federal Employees Health Benefits Program. The standard plan has 2.1 million enrollees, and the basic option has about 261,000 enrollees. Four years ago, basic had 87,000 enrollees.

Visit http://www.health--savings--accounts.com for more information on HSAs and to compare Blue Cross Blue Shield plans.