CHARLESTON — Gov. Jim Justice acknowledged three inter-related bills with financial significance at a ceremonial signing of a budget bill, a bill making changes to the insurance program for public employees and a bill reflecting a pay raise for public employees.
The governor described the pay raise and insurance bills — along with a broad-based tax bill — as trying to strike a balance.
“We now have as close to a permanent fix to PEIA that we haven’t had in the past,” Justice said at Friday’s signing event.
The pay raise legislation was described as an offset for the financial pain of increased insurance costs. Senate Bill 423 provides $2,300 across-the-board pay raises for educators and State Police troopers because their pay scales are set in state code. Raises for other state employees are meant to be dealt with more generally in the budget.
The insurance legislation, Senate Bill 268, makes a range of changes to PEIA, out of concern that the agency faces growing financial stress.
Before the recently ended Legislative session began, Wheeling Hospital announced it would move toward not accepting PEIA patients because of the low reimbursement rate. That raised alarm that other medical providers would do the same, and one aspect of this bill raises the reimbursement rate to 110% of what Medicaid pays.
“Everybody talks, ‘You’ve got to have a long-term fix.’ I think this is an incremental step, the same as we did incremental steps in the 90s and around 2001 and things like this,” Sen. Bob Plymale, D-Wayne, said on MetroNews’ “Talkline.”
“We also were on the verge of having an access to care issue, the same issue we were having in the 90s — access to care where providers were not going to be accepting PEIA patients. So I think this is a good step in the right direction to get us more to the 80-20 plan like we have been doing since 2001.”
He acknowledged the swift return to 80-20 will be an abrupt adjustment for many people, although he said the pay raise should help cushion the blow.
“But I think the other side of this, we’re providing for most of the employees an amount that is equal to the premiums so it will not be affected at their home for groceries and things like that,” he said. “So I think it’s a responsible way of handling it.”
A major goal of the bill is to return insurance costs to an 80-20 split between state government and employees.
That has been the cost ratio set in state code, but it has gotten out of whack over the past few years after the governor and the Legislature established a reserve fund. The governor promised no PEIA premium increases for employees during his time in office, which concludes in 2024.
With premium increases essentially capped, state officials have said the effect has been making the ratio actually more like 83-17.
A five-year PEIA outlook released last year anticipates keeping employee premium increases at zero through 2027. But costs to the state would go up exponentially over those years.
By 2027, the outlook anticipated, state government would have to transfer an additional $376.5 million in public funds to bolster the insurance program.
A return to 80-20 will alleviate that pressure on state government, but it will mean a significant and rapid adjustment for employee out-of-pocket costs, estimated to be up to a 26% premium increase.
Another lightning rod in the bill would require spouses who have other insurance options to buy into the program if they want to participate in PEIA. That’s estimated to be a $147 monthly cost.
There are about 230,000 participants in the insurance program for public employees.
“The governor has put money in the last three years to prevent any increases in premiums over those three years,” said West Virginia Education Association President Dale Lee.
“We’ve known since the task force of 2019 that employees were going to have to have some skin in the game. But we weren’t given the opportunity to have small premium increases during those three years. Now you’re looking at a 25% premium increase. Had we been able to put money in each of these past three years or since 2019, you would have had small increases instead of a 25% increase.”
