Leaders of organizations for workers say they’re concerned about the provisions of a broad-ranging bill affecting the Public Employees Insurance Agency.
On Saturday afternoon, the state Senate passed the 56-page PEIA bill, characterizing it as necessary to hold costs in line and preserve the insurance program for the future.
Senators acknowledged that costs for insured employees will likely go up but pointed toward accompanying legislation for $2,300 across-the-board pay raises as an offset.
In a set of statements distributed after the bill was passed, union leaders indicated they’re not buying that argument.
“Without providing solid numbers or clear answers, the Senate is bundling a pay raise bill with what appears to be very painful insurance increases in the hopes that it will lessen the blow to public employees,” West Virginia AFL-CIO President Josh Sword stated.
“I have some very serious concerns that some of the lowest-paid and most vulnerable plan participants, including retirees, will indeed suffer greatly.”
Senate Bill 268 makes a range of changes to PEIA, out of concern that the agency faces growing financial stress.
Under questioning in a floor session Saturday afternoon, Senate Majority Leader Tom Takubo said the bill is expected to result in $76 million in savings to the state in the first year and more than $500 million by 2027.
“At the end of the day, I think our state employees realize that PEIA, financially, has issues,” said Takubo, R-Kanawha, describing significant thought by lawmakers and the Governor’s Office. “What this plan does is it does make PEIA sustainable into the future.”
There are about 230,000 participants in the insurance program for public employees.
One of the major goals of the bill is to return insurance costs to an 80-20 split between the employer 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 Gov. Jim Justice and the Legislature established a reserve fund. The governor has promised no PEIA premium increases for employees during his time in office, which concludes in 2024.
Senator Mike Caputo, D-Marion, said he hopes the governor is watching the changing situation. “Mr. Governor, I hope you’re listening and I hope you still have the same position that you’ve stated publicly so many times throughout your administration and I hope that maybe you’ll consider vetoing this bill and bringing the Legislature back to find a more viable solution.”
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 anticipates, state government would have to transfer an additional $376.5 million in public funds to bolster the insurance program.
“To keep this plan solvent, without increasing premiums, little by little, little by little, until it grows into substantial we’ve been putting stuff into the reserve fund to make out for the loss in PEIA,” said Senate Finance Chairman Eric Tarr, R-Putnam.
The return to 80-20 could mean a significant and rapid adjustment for employee out-of-pocket costs.
The union leaders concluded that could mean a 26 percent increase in employee premiums for state participants.
“We do not feel that they were forthcoming in their answers to the actual costs to employees,” said Joe White, executive director of the West Virginia School Service Personnel Association.
“We do not want employees to be shocked by seeing large deductions from their paychecks. Our folks are like everyone else and they deserve to actually see a pay increase.”
Fred Albert, president of AFT-West Virginia, suggested that even if the pay raise covered the immediate insurance cost increases, that doesn’t take into account the increases that are bound to come in future years.
“While we are appreciative of the $2,300 pay raise for teachers, service personnel and state employees, we are still concerned with how this is going to offset PEIA premium increases now and in the future,” he said.
Some aspects of the bill spell out the fiduciary responsibilities of the members of PEIA’s finance board. There’s guidance for the PEIA finance board to base its conclusions on an 80-20 employer and employee match.
The bill also requires an actuarial study to address the financial solvency of the plan.
More concern has focused on changes to spousal coverage. The senators working on the bill have said it would not remove spousal coverage, but does include a buy-in for spouses who are not covered by PEIA for their own employment. How much the buy-in would cost is the question.
“There are still many unanswered questions,” said Dale Lee, president of the West Virginia Education Association. “We don’t know how much the ‘actuarial value’ of the spouse coverage is. Our members need to know the financial impact this will have for them.”
To some degree, the bill flew under the radar in the Senate. There was discussion in the Senate Health Committee and in a Finance subcommittee that examined the bill. But the full Finance Committee advanced the bill late last week with no discussion. That meant there were few opportunities to examine the actual effects to people insured by the plan.
Senators did ask each other questions about the effects of the plan during Saturday’s floor session.
The bill now goes to the House of Delegates.
“Law enforcement and other public workers deserve better than half-truths and innuendos,” said Elaine Harris, international representative for CWA District 2-13, advocates for corrections workers, and state troopers, among other public employees. “It’s past time for Senate leaders to be honest about the real impact of this legislation.”