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PEIA projects no premium increases, but anticipates future financial strain for state

The Public Employee Insurance Agency is projecting no premium increases for state workers this year as it takes a draft plan out to the public, but a five-year outlook shows state costs skyrocketing by hundreds of millions of dollars.

The five-year PEIA outlook released today 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 anticipates, state government would have to transfer an additional $376.5 million in public funds to bolster the insurance program.

Jim Justice

For Gov. Jim Justice, this is an example of the “doop happens” mantra that he has repeated at stops around the state while urging citizens to approach property tax cut proposals with caution.

“Just a few years out, the PEIA folks are forecasting that we’re going to be upside down $376 million that we’re going to have to fund, and then it’s going to probably continue to go up,” Justice said during a briefing today.

The PEIA Finance Board, which oversees expenditures, met Oct. 20 to discuss a plan for the coming year. But after ending the most recent fiscal year $92 million down, agency officials said they weren’t yet ready. So the board plans to meet again Thursday to discuss the coming year’s plan and the long-term outlook.

The unsettled finances of the insurance program for state employees comes right at the climax of a contentious election cycle. It also comes while the state budget is hundreds of millions of dollars above projections, while close observers assess whether that is sustainable and while high-profile political figures feud over dueling tax cut plans.

The pain of PEIA costs has been acute in West Virginia. In 2018, rising insurance premiums and flat pay prompted a statewide teachers strike.

A PEIA Task Force formed in response to concerns, but the governor wound up stepping in to establish a reserve fund of more than $100 million to hedge against rising insurance costs.

The long-term outlook for PEIA anticipates using $31 million from the fund for 2023 and $74 million for 2024 with nothing available after that, just at the start of the next gubernatorial administration.

Justice described a litany of options, most of them painful.

“We can start changing the rules of the game. We can take away benefits. We can say your spouses don’t qualify. Or we can say if your docs are out of state, across the border and you’re a border county, you can’t go over there. We could start changing the rules of the game for all the folks that are on PEIA. You know, or we could start raising premiums. Or we’d better just step back and know that doop does happen.”

Dale Lee

West Virginia Education Association President Dale Lee has frequently warned about the lack of a long-term plan while also noting that he couldn’t realistically expect premiums to stay absolutely flat forever.

Lee today said the long-term outlook serves as a warning.

“My fear is, as I’ve been saying forever — since 2019, really — that if you look at the state appropriation that’s going to be needed in the years 2025, 2026, 2027, it goes from $204 million up to $376.5 million in 2027,” Lee said.

“You can’t sustain that amount of increase each year without providing a funding source, and they’re doing it in the state budget appropriation under this plan.”

Lee agreed that the current administration has committed to keeping premiums flat while Justice remains in office. But Lee said all bets are off after that.

“The governor has made good on his pledge not to see any increases while he’s in office,” Lee said. “What this chart shows me, though, is that the governor in 2026 and 2027 has a huge hole that they’re projecting that they fill with this money, and we don’t have that same dedication or promise from a future governor that this governor has.”

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