NCPA - National Center for Policy Analysis


September 16, 2004

The Bush administration will offer more than three million federal employees and their families a new type of high-deductible health insurance that includes tax-free savings accounts.

  • Aetna, one of the nation's largest insurers, would take the lead, providing the insurance and administering the plans for federal employees in 32 states and the District of Columbia.
  • Seventeen other insurers, including the Government Employees Hospital Association and the Mail Handlers Benefit Plan, will also offer the savings plans, as will Coventry Health Care in several states.

The new plans, which are a centerpiece of the Republican election platform and President Bush's campaign, will also be available to members of Congress and judges under the Federal Employees Health Benefits Plan, the nation's largest purchaser of health insurance.

Under the Aetna plan federal employees in New York will pay a few dollars more in premiums than traditional Blue Cross plans in the state.

  • The Aetna premiums will be $83.27 a month for individual coverage and $191.53 for families.
  • The government will bear most of the cost, contributing $2,998 a year for individuals and $6,895 for families.

Aetna says that in New York and elsewhere it would deposit $1,250 for individuals and $2,500 for families in each of the federal health savings accounts, which workers can use tax-free for medical outlays and roll over unused amounts for future needs.

Under the plans, there will be no charge for preventive care by doctors in the Aetna network.

Health savings account plans, which were enacted by Congress as part of sweeping Medicare legislation last December, are meant to let people decide for themselves whether to pay for high-priced drugs or treatments.

Source: Milt Freudenheim, "A Health Insurance Option Coming to Federal Workers," New York Times, September 16, 2004.

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