West Virginia’s health insurance program for government employees and their spouses is our state’s version of the “third rail of politics.” It is frequently considered untouchable, like Social Security at the national level.
An estimated 230,000 county school and higher education employees, state and local government workers, state retirees, spouses and survivors depend on the state’s Public Employee Insurance Agency for their health care coverage.
Since its creation in 1971, its members have come to see PEIA as an entitled benefit and a critical part of their overall compensation that makes up for what is frequently low pay. Politicians have recognized its sacrosanctity and tried to hold down the costs to employees. Governor Justice even promised that there would be no premium increases as long as he is in office.
However, there is a fundamental problem with PEIA: It spends more money on services than it has coming in. Without a correction, PEIA is headed toward a collapse. In response, the state Senate has passed, and now the House is considering, significant changes to the program.
The biggest change is a premium increase that could be as high as 26 percent. That will be a major shock to the system. However, bill supporters say the dramatic increase is a “catch-up,” since premiums have risen only nominally, if at all, for the last decade, while health care costs go up annually.
PEIA is supposed to be an 80-20 split; the employer (the state) pays 80 percent of the cost while the employee pays 20 percent. The state subsidies to the program over the years have distorted the ratio to a roughly 83-17 split. The premium adjustment will bring it back into balance.
Spousal coverage will also change under SB 268. If a state employee’s spouse has health insurance available through another employer, then they will have to get coverage there. If the spouse wants to stay on the PEIA plan, they will have to pay an additional $147 a month.
Another provision in the bill raises the amount plan members will have to pay for care outside West Virginia, which typically charges PEIA more than in-state providers. The bill raises the co-insurance rate from 20 percent to 30 percent for out-of-state care.
The bill does not raise the premiums for PEIA/Medicare retirees. Pre-Medicare PEIA retirees are projected to see a seven percent increase in the cost of their care, but any impact to their premium will be up to the PEIA Finance Board.
Governor Justice and Legislators who support the bill say the PEIA changes are part of a “three-legged stool.” The other two legs are a $2,300 pay raise and the tax cut package. They argue that the pay raise and tax reductions will be enough for most PEIA members to absorb the premium increase and still have money left over.
Not everyone agrees.
Labor leaders are raising objections. WVEA, AFT-WV, the state School Service Personnel Association, AFL-CIO, the Communications Workers of America, the UMWA and the State Troopers Association put out a joint communique calling SB 268 “The PEIA Cost Shifting Bill.”
“Legislative leaders are trying to make PEIA solvent by reducing benefits and kicking participants off the plan, instead of creating a dedicated revenue stream for long-term stability,” the information sheet said.
One union leader confided that he has heard chatter among a few teachers about a possible walkout to protest the bill. In 2018, teachers and service workers walked off the job for nine days to protest over low pay and the instability of PEIA.
No one likes to see their health insurance premiums rise or their benefits change, but everyone else who has private health coverage endures that annually, so they may not be overly sympathetic to strikers.
The uncomfortable truth is that PEIA premiums have been kept artificially low for a decade and the spouse coverage is, in essence, a West Virginia taxpayer subsidy to private employers.
The catch-up is tough medicine, but necessary for the stability of this critical and valued benefit of West Virginia government employment.