CHARLESTON — PEIA’s Finance Board is going around the state for conversations about what many public employees will likely consider bad news, a 10% premium increase for the coming year.
That’s on top of a 24% increase for state employees and educators instituted for the current year — changes that have gone hand-in-hand following legislation mandating that the insurance plans snap back to an 80-20 cost split between the government employer and insured employees.
The finance board for the Public Employee Insurance Agency will hear from the public in Morgantown Thursday.
Organizations that represent workers have acknowledged they’re aware that people covered by the Public Employees Insurance Agency have not experienced the same kind of premium increases as private sector workers over the past few years. Still, the back-to-back cost bumps represent sticker shock, leaders of those organizations said.
“I don’t know any private plans that have shown that dramatic an increase over two years in premiums. Now, I will give you that we went three years with no premium increases; I understand that,” Dale Lee, president of the West Virginia Education Association, told the PEIA Finance Board last month when the latest increases were outlined.
He noted that the governor had pledged that there would be no premium increases on his watch and that a reserve fund established by state government kept premium increases at bay for several years.
Now we’re looking at 10%, 10%, 10% over the next three years. While that might seem reasonable to some, it’s not reasonable to our employees,” Lee said.
The PEIA Finance Board is proposing:
- 10.5% premium increases and no benefits changes for state employees who get the insurance.
- 13% premium increases for employees of local governments that opt into PEIA, plus the addition of a surcharge for eligible spouses of about $147.
- No changes in premiums or benefits for retirees who are eligible for Medicare.
- 10% premium increases and no changes in benefits for people who are old enough to have retired but not old enough to be eligible for Medicare.
The PEIA Finance Board started several public comment sessions Monday in Wheeling. The board will hear from insured workers today in Martinsburg and at 6 p.m. Thursday in Morgantown. The board will host a meeting in Charleston on Monday, in Bluefield on Nov. 14 and a virtual public hearing on Nov. 16.
The finance board is expected to take a final vote on the plan in December.
The premium increases are happening in large part because earlier this year the Legislature passed a multi-faceted bill in response to financial strains, making it mandatory that PEIA conform to an 80-20 cost split between the employer and employees.
That has been the cost ratio set in state code, but it got out of whack over the past few years when the governor and the Legislature established a reserve fund that PEIA could use to cushion its costs.
The West Virginia Center on Budget & Policy outlined the multi-year increases in advance, noting that most public discussion until now had focused on the big, first-year bump.
“Lawmakers touted that SB 268 will “save” the state over $500 million through FY 2027,” wrote Kelly Allen, executive director of the center.
“Those savings are primarily achieved by increasing costs on those insured by PEIA through two main avenues: enrollee premium increases for each of the next four years and a premium surcharge for dependent spouses who are offered health insurance through their own job, regardless of the cost or quality of that coverage. Together, these changes will achieve the legislation’s intent to get PEIA back to a strict 80/20 employer-employee premium split.”
Allen noted that state officials have described offsetting the increased insurance costs with pay raises. Gov. Jim Justice, a couple of weeks ago, said that is his hope again this year.
Allen said insurance costs, lagging pay and shortages in key public sectors are all intertwined.
“Below-average public sector pay has been a contributing factor to vacancies across state agencies, impacting public services and, often, safety for all West Virginians. Staffing shortages have led to a state of emergency in state correctional facilities, increased classroom sizes and long-term substitutes in schools that cannot fill vacancies, and child welfare crises,” she wrote.
“With pay continuing to be below-average combined with health benefits becoming more costly via SB 268, the state’s vacancy issues could soon be exacerbated.”
Sen. Rollan Roberts, speaking on “Radio Roundtable” on WJLS Radio Monday, said the back-to-back premium increases probably are a financial shock to public employees.
“It’s a complicated thing when you’re dealing with insurance benefits and the cost ratios,” said Roberts, R-Raleigh, chairman of the Senate Workforce Committee.
“I’m disappointed that they feel like they have to increase so much so soon. I haven’t been given the numbers. In January, they will report to us and defend why they have to do what they’re proposing. But you know, 10 1/2% premium increase for the state employees — I know the governor says he wants to offset that, and that may be what is dealt with legislatively to soften that blow,” Roberts said.
“We all knew it was pretty much a free ride for a long time, longer than it should have been.”
