Federal Employees Health Benefits Program

T-GGD-89-26: Published: May 24, 1989. Publicly Released: May 24, 1989.

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GAO discussed the Federal Employees Health Benefits Program, focusing on administrative cost trends, controls to prevent fraud and abuse, and Office of Personnel Management (OPM) oversight. GAO found that: (1) about eight million federal employees, annuitants, and their dependents receive health benefits totalling $11.6 billion in premiums, of which the government will pay $8.2 billion; (2) of the $7 billion spent on experience-rated plans in 1987, about 90 percent was paid for benefit claims, while $534 million was for administrative expenses, premium taxes, and service charges; (3) between 1982 and 1987, administrative expenses increased 75 percent and service charges increased 77 percent, while enrollment increased less than 2 percent; (4) although OPM annually negotiated with the plans to control costs through expense ceilings, they were not effective because plans seldom reached the ceilings; (5) in 1987, the plans charged $44 million for premium taxes imposed on them by states and other governmental entities; and (6) some plans paid no premium taxes because they recovered their losses through higher premiums. GAO also found that OPM: (1) lacked effective oversight over program fraud and abuse, including embezzlements, commingling of funds, and inappropriate program charges; (2) had not required plans to monitor claims to detect fraud and abuse; (3) had not implemented regulations to exclude from the program health care providers who were found guilty of criminal fraud or unethical practices; and (4) did not identify the program as having internal control weaknesses in its annual reports.

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