Each FEHBP carrier offers one or more plans, and these plans can have  up to three options, or levels of benefits, depending on which type of plan  is being offered. The Number of Available FEHBP Plan Offerings Increased Since 2007 and Enrollment Was Increasingly Concentrated Available FEHBP Plan Offerings Generally Increased in Recent Years, although Variation Existed among Counties

The number of plan offerings available to FEHBP enrollees generally  increased from 2007 through 2015. The  median number of plan offerings available in a county increased from 19  in 2007 to 24 in 2015. While the total number of  HMO plans that participated in FEHBP decreased from 2007 through  2015, the median number of HMO plan offerings in a county increased. The share of the market held by the largest carrier increased from a  county median of 58 percent in 2000 to 70 percent in 2007, to 72 percent  in 2015. GEHA held the second or third largest market share in  77 percent of counties in 2015, reaching as high as 65 percent of the  county market share, for example, in a county in Texas, but was the  largest carrier in less than 1 percent of counties. Stakeholder Opinions and Cost Estimates Do Not Offer Clear Consensus about the Potential Effects of Expanding OPM’s Contracting Authority

		Stakeholders Generally Supported Expanding OPM’s Authority, but Said Using That Authority to Add Regional PPO Plans Could Have Negative Effects

Seven of the 10 stakeholders we interviewed, and who commented on  OPM’s contracting authority, generally supported expanding OPM’s  contracting authority to allow it to contract with a greater variety of health  plan types than are currently offered in FEHBP. However, these estimates are based on different  assumptions about a variety of factors such as premium changes,  administrative costs, and enrollment, and only limited information was  available about the methodologies used for each set of estimates. According to information provided by OPM, the  estimate considered the effect of a broad expansion of OPM’s  authority to add new plan types, and OPM did not indicate whether  the agency specifically considered the effect of adding regional PPOs  to FEHBP when developing this estimate. Agency Comments

We provided a draft of this product to OPM for comment. The agency did  not provide any comments. Appendix II: Stakeholder Opinions about Other Federal Employees Health Benefits Program Aspects That Affect Competition

Some of the stakeholders we interviewed suggested that any positive  effects of expanding the Office of Personnel Management’s (OPM)  contracting authority and adding additional plan types to the Federal  Employees Health Benefits Program (FEHBP) could be limited because  of other aspects of the program that affect competition and discourage  carrier participation. Some stakeholders noted that plans—in particular, health  maintenance organizations (HMOs) that offer service in areas with higher  concentrations of older enrollees—experience challenges keeping  premium rates competitive with the nationwide plans like those offered by  the Blue Cross Blue Shield Association (BCBSA). Private Health Insurance: The Range of Premiums and Plan Availability  for Individuals in 2014 and 2015. Federal Employees Health Benefits Program: Competition and Other  Factors Linked to Wide Variation in Health Care Prices. Federal Employees’ Health Plans: Premium Growth and OPM’s Role in  Negotiating Benefits.
Why GAO Did This Study

FEHBP provides health care coverage to about 8 million federal employees, retirees, and their dependents through carriers that contract with OPM. The Federal Employees Health Benefits Act of 1959 limited the types of plans OPM could offer. OPM has reported that the program needs more competition between plans and more diverse health plan choices and has proposed that its contracting authority be expanded to allow a greater variety of types of health plans to participate in FEHBP than are currently allowed.
GAO was asked to examine FEHBP plan participation and the potential impact of OPM adding new plan types to the program. This report describes, among other things: (1) how the number of plans and market shares of carriers participating in FEHBP changed in recent years, and (2) what is known about the potential effects of allowing OPM to contract with a greater variety of types of health plans than are currently offered. GAO requested OPM plan availability and enrollment data by county for 2000 through 2015, but county-level availability data were only available for 2007 and 2009 through 2015. Therefore, plan availability and market share analysis timeframes differ. GAO also interviewed OPM officials, 11 FEHBP stakeholders, such as carriers and federal employee and retiree organizations, and reviewed relevant documentation and research, such as cost estimates of the potential effects of expanding OPM's authority.
GAO provided a draft of this product to OPM for comment. The agency did not provide any comments.

What GAO Found

Federal Employees Health Benefits Program (FEHBP) enrollees can choose from a number of health plan offerings depending on where they live. From 2007 to 2015, the median number of plan offerings available in a county increased from 19 to 24. Of the 24 plan offerings in 2015, 19 were available nationwide and 5 were health maintenance organization plans offered in specific geographic areas. Yet despite more available plan offerings in recent years, enrollment has become more concentrated within the largest health insurance carrier in a county. Specifically, the median share of enrollment held by the largest carrier in a county increased from 58 percent in 2000 to 72 percent in 2015. Further, one carrier—the Blue Cross Blue Shield Association—was the largest carrier in 93 percent of counties in 2000 and 98 percent of counties in 2015.
The stakeholders GAO interviewed and the cost estimates GAO reviewed about the potential effects of expanding the Office of Personnel Management's (OPM) authority to contract with more plan types than currently offered in FEHBP did not offer clear consensus about the effects. Most stakeholders supported expanding OPM's authority; those opposed were primarily concerned about OPM adding regional preferred provider organization plans, saying this could cause program instability and higher premiums. Estimates by OPM and others differed significantly on whether the expansion would increase or decrease costs. This is because they used differing assumptions about premiums, enrollment, and other factors, and it is unclear whether the assumptions used in these estimates will be realized.