Federal Employees Health Benefits Program
T-GGD-89-26, May 24, 1989
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.