The focus has shifted to a plan that would keep West Virginia’s public worker health insurance programme financially stable while simultaneously increasing premiums for state employees and local governments who participate in the programme now that the Crossover Day deadline has passed.
The Public Workers Insurance Agency-related Senate Bill 268 was revised, and the House Finance Committee on Thursday recommended bringing the bill to the entire House of Delegates for consideration.
SB 268 establishes numerous requirements for PEIA Finance Board members, mandates a five-year analysis of potential future costs to the programme, and mandates an actuarial study of the plans provided by PEIA. It also sets the reimbursement rate for all healthcare providers at a minimum level of 110% of what Medicare reimburses providers.
The bill also mandates that PEIA resume an employer-employee match of 80/20 starting in July, with a 70/30 split for out-of-state medical expenses. Delegate Erikka Storch, a Republican from Ohio, introduced an amendment that would maintain the 80/20 employee/employer match for health care in counties outside West Virginia that are adjacent to those in that state.
The measure would raise the cost of the plan for spouses of PEIA plan participants who have access to health insurance coverage to the PEIA plan’s actuarial value, which may add an extra $147 per month to the monthly premium for plan participants.
The term “actuarial value” was defined by a committee amendment from the House Finance Committee to denote the value as suggested by the health care actuaries hired by the PEIA Finance Board. The spouse actuarial value would have to be submitted by the actuaries to the PEIA Finance Board by October 15 of every year.
The Senate Finance Committee calculated that SB 268 will save $76 million in the first year and more than $500 million by 2027. State hospitals’ complaints regarding PEIA’s in-state reimbursement rates prompted the measure itself. Due to the issue with the reimbursement rate, Wheeling Hospital declared late last year that it will stop accepting PEIA as of July 1.
“Having the increases hurts, but in the end, if we want PEIA to be financially stable and available as a benefit for our employees, I think we need to make the difficult decisions since it is a service provided to our people,” Storch said. “I want to have a plan, and we want the plan to last for a very long period,” the speaker said.
The most current fiscal note from PEIA that is readily available estimates that the bill’s total implementation costs will be $27.7 million. After July, premiums could rise by 26% for individuals and 25% for companies if the state switches back to an 80-20 match.
The proposal would be the first premium rise in more than ten years. The plan is closer to an 83-17 employer-employee match as a result of premiums being fixed in place for years. More than 230,000 state, local, and retiree employees—including more than 31,000 non-state employees like municipal workers—are covered by PEIA.
SB 268 was approved by the state Senate on Saturday with a vote of 29-4, despite the absence of state senators Michael Caputo, D-Marion, and Mike Stuart, R-Kanawha, and Laura Wakim Chapman, R-Ohio.
The bill, according to Senate Finance Committee Chairman Eric Tarr, R-Putnam, who discussed it last week, was the outcome of talks between the House and Governor Jim Justice. The governor has been an outspoken advocate for maintaining frozen PEIA premiums. During his virtual administrative briefing on Thursday, Justice was asked about SB 268 and commended lawmakers for developing a PEIA plan.
We must find a solution to PEIA that will last forever so that we can stop delaying action. “From the Senate and the House’s perspective, they now have a manner, a technique… Several people put in a good day’s work, and all the branches should be commended for it. At the end of the day, it’s not perfect — nothing is ever perfect — but from where I’m at, I kept my promise.”
By fiscal year 2027, medical expenses are projected to rise by 7%, while the price of prescription drugs is projected to rise by 14%, according to a PEIA five-year prediction. Without more state funding for PEIA or higher rates, the programme will have a $376.5 million deficit by the end of the fiscal year 2027.
Justice stated, “We know with medical costs rising constantly, we can’t just turn our back and claim permanently that we’re going to be able to stay at a given level. That won’t work, and we both know it.
In order to fill a $93 million gap at the end of fiscal year 2022 in June, the state has already taken $31 million from a PEIA Rainy Day fund, which it contributed $105 million to in 2019. By the end of current fiscal year, the programme will require an additional $74 million from the reserve fund, leaving a $40 million gap.
During his State of the State address on January 11, 2023, Justice suggested adding an additional $100 million to the PEIA contingency fund. Also, $40 million is included in his general revenue budget for the upcoming fiscal year to offset the price of raising in-state reimbursement rates.
Justice claims that the tax reform plan in House Bill 2526 and the public employee pay raises in the Senate’s budget bill—Senate Bill 150 and Senate Bill 423—which include pay increases for teachers, school service personnel, West Virginia State Police troopers, and staff—will not affect state employees earning less than $133,000 annually.
In place of the 5% average pay boost that Justice initially suggested, Senate Bills 150 and 423 would increase the basic pay of state employees paid from the general revenue budget by $2,300. Personal income tax rates would be reduced by 21.25% under HB 2526. Additionally, it offers a 50% rebate for small businesses on their machinery/equipment and inventory tangible personal property taxes as well as a 100% homestead exemption for disabled veterans. The 100% vehicle tangible personal property tax rebate is given in the form of a personal income tax refund.
“What we did was try to hide that as much as we could… Anyone who earns less than that will receive a wage increase in some form, will be covered by PEIA, and will be able to go to bed tonight confident that PEIA will continue to exist. In my opinion, the trade-off is not too bad.
Today in front of the House of Delegates chamber, a coalition of unions representing various types of public employees will hold a press conference to voice their concerns on the reforms and how they would effect current employees as well as retirees.
Josh Sword, president of the West Virginia AFL-CIO, said last week that the Senate was packaging a pay rise package with what appeared to be extremely severe insurance increases in the hopes that it would reduce the hit to public employees. “Some of the lowest paid and most vulnerable plan participants, particularly pensioners, will indeed suffer tremendously,” the author says.
Democratic members of the House Finance Committee condemned SB 268 and referred to it as a “shell game” that mixed tax cuts and pay increases.
