PEIA’s Finance Board is going around the state for conversations about what many public employees will likely consider bad news, a 10 percent premium increase for the coming year.
That’s on top of a 24 percent 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.
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, said leaders of organizations representing public employees.
“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 percent, 10 percent, 10 percent 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% percent 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 is receiving public comment at 6 p.m. today in Wheeling, Tuesday in Martinsburg and Thursday in Morgantown. The board will host a meeting in Charleston on Monday, Nov. 13, 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 after 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.
“It’s hitting employees and will hit employees for the next several years,” said Kelly Allen, executive director of the center.
“It was surprisingly not a topic of discussion during the legislative session that I heard much,” The Legislature talked about how the 2023 premium increase was going to impact the state budget and state employees, but didn’t talk much about going ahead and how that might continue to impact enrollees and the state budget going forward.”
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.
“PEIA and health insurance is part of the benefits package that people consider when they’re taking a job,” she said. “We know that across state agencies, pay is often lower than it would be in a neighboring state for a similar job. It’s often lower than it would be in the private sector.
“And as we talk about difficulty filling vacancies across state agencies, anything that makes health coverage more expensive could potentially make the job a little big less appealing. In recent years, state employees have gotten boosts in pay from the Legislature but now that’s coming with an increase in health coverage costs.”
Senator Rollan Roberts, speaking on “Radio Roundtable” on WJLS Radio today, 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 and a half percent 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.”