During a succinct, eight-minute meeting, members of the West Virginia Public Employees Insurance Agency Finance Board unanimously approved a freeze on PEIA health insurance premiums and benefits for the 2018-19 plan year.
“For one year, beginning in July of this year, benefits and premiums will be exactly as they are today,” PEIA Executive Director Ted Cheatham said of the freeze, which was called for by Gov. Jim Justice.
“How many companies do you know that don’t have a change in benefits from year to year?” Cheatham added.
The freeze leaves a $29 million hole in PEIA’s 2018-19 budget, a hole that would have been filled under the 2018-19 benefits plan approved in December by increasing premiums on some insurees, primarily through a controversial provision to use total family income to set premiums for family and employee and spouse coverage.
The Legislature is weighing several options to fund the $29 million, including a bill passed by the House of Delegates last week to take the money, if necessary, from the state’s Rainy Day reserve funds.
If the $29 million turns out to be a one-time appropriation, PEIA will need to increase premiums or cut benefits potentially by somewhere in the $70 million to $80 million range for 2019-20, Cheatham said.
“An unpredictable stream of revenue is very difficult to deal with,” Cheatham said. “The Legislature and governor should be looking at a way to drive a financial stream to PEIA for the long-term. This is part of the state employees’ benefits package.”
Given a medical/pharmaceutical inflation rate of 5 percent to 7 percent a year, PEIA needs an average of $50 million in additional funding each year to maintain benefits without raising premiums, he said, adding that unusually strong investment earnings in 2017-18 helped reduce the needed funding increase for the 2018-19 plan year to $29 million.
Cheatham said PEIA is seeing a favorable performance on claims this year, noting that, for 2019-20, “Hopefully, that $50 million we will need will be something less.”
Dale Lee, president of the West Virginia Education Association, and Bob Brown, executive director of the West Virginia School Service Personnel Association, thanked the board for enacting the freeze. But they called for the appointment of a task force to come up with long-term funding solutions.
“I want to thank you for hearing the cries of thousands and thousands and thousands of public employees, including about 10,000 who stood in the rain Saturday,” Brown said, referring to the “Statewide Day of Action” rally on the Capitol grounds.
“You’ve heard the people, and you’re doing something in response,” Lee said. “But this is not the end; this is not the solution.”
He said current legislative proposals to help shore up PEIA funding, including using a portion of potential profits from sports betting, or directing a percentage of future budget surpluses to PEIA, are speculative, at best.
“We are willing to roll up our sleeves and go to the table to help solve this problem,” Lee said.
Issues with PEIA premium increases and benefit cuts are one of several grievances that have led to the calling of a statewide walkout of teachers and school service personnel on Thursday and Friday.