CHARLESTON — Plenty of tough decisions are still ahead for the PEIA Task Force.
The task force meant to shore up finances for the Public Employees Insurance Agency concluded more than 20 public hearings around the state last week.
Now it must absorb the feedback and crunch data to figure out a strategy and how to pay for it.
“It’s hard to really define,” said Mike Hall, the chief of staff for the Justice administration. “But to say what is a fix for PEIA? What’s broken or what are people really troubled about when it comes to the PEIA plan?”
The cost
The state makes a major financial commitment to PEIA, with $921 million required for 2019.
Of that, $647 million is attributed to active participants including state employees or school personnel, as well as municipalities that participate. Retirees constitute another $274 million.
What pays for PEIA now
The Legislature, through the general revenue budget and special revenue accounts, funds PEIA.
About 40 percent of that $921 million comes from personal income tax collections, Hall said. Another 30 percent is sales tax, about 20 percent is severance tax paid by energy companies, and 10 percent from tobacco tax.
“The plan is, therefore, paid by general revenue of the state, not just dedicated one source,” Hall said. “We have no one source that we can dedicate $921 million to.”
Annual rising costs
The future price tag for PEIA projects to rise about $50 million each year.
Simply to retain the same level of benefits, the state must find additional money for medical inflation, Hall said.
Changes
That year-over-year expense could climb higher if the PEIA Task Force heeds public comments to modify the plan.
“Because we have heard from you all about things you’d like to have changed, if those things are changed in any significant way, then the cost of the plan could go up and you would need more funding,” Hall said.
Three issues have been brought up repeatedly:
- Out-of-pocket costs such as co-pays.
“That’s pretty obvious that people would complain about that,” Hall said. “We’ve also heard that when you were hired the cost of your health insurance may have been nothing or over time there was an addition of the 20-80 or so forth and so on.”
Any change involving those issues would certainly raise costs for the state, Hall said.
- The higher cost of seeking medical care across the state’s borders.
“If you live in a border county or near an area where you’ve got access to the healthcare system from outside the state, particularly in the eastern and northern panhandles, there’s been a lot of conversation about the fact that the co-pays and maybe the deductibles are greater because you have to access a hospital outside of the state.”
The trick is, Hall said, the 230,000 people enrolled in PEIA give the agency significant leverage when negotiating with in-state healthcare providers.
PEIA actually reimburses at a rate lower than what Medicaid does, Hall said.
“Some of the out-of-state hospitals will not do that. They will not take what we will pay them,” he said.
Still, the Task Force heard enough about the border cost problem that the issue will be heavily considered.
- The drug formulary problem.
Hall summed it up this way:
“I was on a certain drug. My doctor said I needed to go on something else because of the formulary. The formulary drug doesn’t help me. Not everybody’s body is the same.
“So you have to step outside the formulary to try to access another drug and you find out from PEIA that’s not covered. Then you get into a battle with your doctor or the PEIA plan because maybe you’re getting sicker, maybe there’s problems.”
Those situations aren’t uncommon with health care plans.
Neither are pre-authorizations for testing or prescriptions. That red tape can be a problem if time is of the essence.
“Every health insurance plan in America has this problem,” Hall said.
Each of those three major issues will be discussed by the Task Force, but fixing one impacts the others.
“If you change preauthorization or you change drug formulary or you cover out-of-state, all those come with a cost. Right now we don’t know the cost but if you change some of those things or liberalize them a little bit or made the formulary larger or whatever, maybe it costs $100 million dollars,” Hall said.
“The fix may be how you change the plan design and put it all together.”
Structure
One way to deal with costs is evaluating the tiers for PEIA.
PEIA is unique in that it’s based on ability to pay, a factor that’s a frequent target for criticism.
The plan currently is organized within 10 tiers.
“Now because those tiers are pretty tight those of you who get incremental pay increases or the state employee pay increase this year, chances are you may be bumped up a tier so that you’ll see an increase in your individual premium based upon the plan design as it has been for years or you won’t,” Hall said.
“And so a part of a fix may be to look at and this is a cost fix – to look at those tiers because that’s a significant factor in there.”
Taxes
Speakers at public hearings urged an increase in West Virginia’s severance tax on natural gas.
That may be a hard sell for West Virginia’s legislature, whose Republican majorities often advocate for lowering taxes for employers and potential employers.
Senate President Mitch Carmichael, who attended about 10 of the hearings, said he has heard the discussions.
“Often those solutions revolve around increasing taxes on West Virginians or more commonly the out-of-state corporations,” Carmichael said.
The Senate President is skeptical of many of those tax increase recommendations.
“Lots and lots of people raise their hands and say ‘Reinstitute the tax on food, raise the severance tax on natural gas by 50 percent, raise the corporate net income tax in West Virginia by 50 percent. And often they’ll all be couched with this parenthetical phrase ‘And create more jobs in West Virginia’ while you’re raising taxes on the job creators.
“So it’s often in cross-odds in that respect. But, having said all that, we’ve listened to the public and we really want to hear what is perceived as a fix.”
Timelines and politics
The Task Force hopes to take a crack at all these issues over the summer, providing recommendations in time for the separate PEIA Finance board to make its own recommendations this fall.
The PEIA Finance Board is on its own annual timetable to get recommendations out for public comment in November.
“We have public hearings again in November for the PEIA Finance Board, so all these people are going to be coming back around to say the Task Force gave you some recommendations, what are you going to do with that?” said Christine Campbell, president of the American Federation of Teachers-West Virginia.
The Legislature and the governor would need commit to any increase of public funds to shore up PEIA.
“The timeline has been established. What is the Legislature going to do to ensure?” Campbell said.
November brings the general election, which is a leverage point for public employees.
Many rallied on the Capitol steps prior to the final Task Force public hearing in Charleston. And, of course, the Task Force came into being as a result of a statewide teachers strike earlier this year.
Another strike looms if there’s not a satisfactory solution, Campbell said recently.
“It’s clear from the members’ perspective and the employees’ perspective they’re absolutely willing to do that,” Campbell said.
“There has to be some legislation passed so people have to start committing to that in the elections so that we can have representatives that actually are going to do something come the legislative session.”
Public employees remain motivated to see this through, said Dale Lee, president of the West Virginia Education Association.
“It’s easy to sustain when people are determined to have their voice heard and want people to know that this is something that they expect, that they deserve,” Lee said.
“It’s not something that’s a privilege. Health insurance shouldn’t be a privilege, it should be a fundamental right. Our kids or our retirees should never have to choose between medicine and food, and in a lot of places that’s what’s happening.”
All this discussion has been about insurance, Lee said. But it’s also about politics.
“It’s about insurance, but everything that revolves around our profession is political,” he said. “All the decisions are made there in the Capitol, so it’s time for us to put people in office who are going to move this state forward, and we can do that looking across all boundaries.”
Carmichael said the difficult choices can’t be rushed under political pressure.
“There are those who say ‘We’re going to go back out on strike’ or ‘We’re going to hold you accountable in November’ and those kinds of things, almost in a threatening manner. We’re not going to respond to that kind of pressure. We’re going to do this in the most deliberate, judicious, thoughtful manner that we can.”
“We’re being asked to solve an issue that resonates throughout America.”
