The Legislature and a new governor will soon have say-so over any policy response to the increased cost of insurance for public employees.
The Public Employees Insurance Agency has proposed cost increases to make up an estimated $113 million gap for the coming fiscal year because medical and drug expenses have outpaced the money available.
West Virginia public educators went on a statewide strike in 2018 over concerns that their pay rates did not adequately compensate for the rising cost of insurance. Gov. Jim Justice’s administration dealt with the conflict with a series of pay raises.
The administration also pumped millions of dollars into a PEIA Rainy Day Fund that was meant to hold down cost increases. The fund did suppress cost increases to workers for a few years, but the practice has ended.
Senate Finance Chairman Eric Tarr, R-Putnam, pointed toward those responses to say officials have already taken steps to cushion any financial blow for state workers.
“What the Legislature has been doing with public employees is, we’ve been doing 5% pay raises year after year after year, and at the same time the governor held premiums flat — so a 0% increase while medical inflation was exorbitant,” Tarr said this week on MetroNews’ “Talkline.”
Compared to that, he said, the private sector has dealt with considerable premium increases over the same time period.
“If you look at a comparison to that to what the Legislature has done in raises, compared to what the real premium increase is over time, it’s about a fifth of what private sector is,” he said. “So while it’s an increase and anybody hates to have an increase in their health insurance, it is very much suppressed.”
Public employees in the state’s plan could face premium increases next year of 14% for the state fund or 16% in plans for local governments. Retirees would face a 12% premium increase.
The agency is proposing increases in deductibles of 40% — on average more than $300. Additional proposed cost increases for people with the insurance, including a bump in the surcharge for spouses to $350 from the current $147, are meant to help PEIA make up a total of $113 million. The other cost increases include higher copays for inpatient services, outpatient, therapy, pharmaceuticals and emergency room treatment.
The cost pressures for insurance have occurred after legislation passed to mandate that the insurance plans snap back to an 80-20 cost split between the government employer and insured employees. Those 2023 changes to PEIA also responded to complaints that healthcare providers were having trouble making ends meet because of the state insurance’s traditionally low reimbursement rate. Lawmakers passed a bill making reimbursement rates for medical providers up to 110 percent of the federal Medicare rate.
“With medical inflation, you’re never going to have to where the state’s going to entirely subsidize the healthcare plan for public employees, and at the same time medical costs are going to continue to go up,” Tarr said.
“So I would say that what we’re seeing is probably a best effort of what we can do to go in and have the public employees not realize a total cost increase because the taxpayer that pays into the state to pay for PEIA premiums is also paying for this increase because it’s an 80-20 split.”
The PEIA Finance Board had public hearings all around the state to hear from people affected by the proposal.
Delegate Mike Pushkin, who is also chairman of the state Democratic Party, attended the hearing in Charleston. Pushkin, D-Kanawha, said state workers and retirees will have trouble absorbing the increased costs.
“The people who work for us, the people who take care of us are concerned because they don’t get paid a whole lot,” Pushkin said on “Talkline. “And now they’re going to have more money taken out of their paycheck with these proposals from these premium hikes that are being proposed.”
Pushkin said he does not blame the PEIA Finance Board for the challenges of healthcare costs. Legislation passed a couple of years ago included language explicitly assigning fiduciary responsibility to members of the PEIA Finance Board, so the agency really has no choice but to find ways to make up its funding gap.
“I’ve been going to these meetings for quite some time and the names and the faces of the board have changed, but the problems remain the same because the Legislature refuses to prioritize this,” Pushkin said.
“It shouldn’t be the finance board. It should be the House Committee on Finance and the Senate Committee on Finance that should be required to sit through those meetings and listen to people’s concerns because that’s who can do something about it. It’s the Legislature.”
