Health insurance premiums for federal employees are expected to rise by an average of 7 percent in 2009, the Office of Personal Management announced. The increase represents a sizable step from the previous year, as insurance premiums only increased 2.9 percent from 2007 to 2008. The increase will be more than three times the 2008 increase of 2.1 percent.

Nancy Kichak, OPM's associate director for strategic human resources policy, blamed the steep increases on a variety of factors, including elevated service costs, miscalculated earlier estimates, and an increase in the utilization of medical services and technology.

The agency uses "firm negotiation with the health carriers to keep cost increases as reasonable as possible," the OPM said in a statement.

Federal employees’ premiums will climb an additional 13% next year for enrollees in the Blue Cross and Blue Shield Plans. Sixty percent of federal workers are enrolled in one of the Blue Cross and Blue Shield plans. Blue Cross and Blue Shield blame the cost increases on drug costs and the fact that few patients have switched to cheaper generic medications.

"It’s very discouraging to see average increases of this magnitude…particularly given the bargaining power OPM should be able to exercise as manager of the nations largest group plan," said Colleen Kelly, president of the National Treasury Employees Union.

Under the Federal Employees Health Benefits Program, enrollees choose from among 269 health-plan options, which cover 8 million federal workers, retirees and dependents. Employees will be able to change their health insurance selections during the open season, which will run from Nov. 10 to Dec. 8.