As the Public Employees Insurance Agency considers major increases on premiums and deductibles, outgoing Gov. Jim Justice advised his successor to strongly consider another round of pay raises to make up for the hike.
“In regard to PEIA, this is what I would tell the governor: I would say, these employees do a whale of a job, and I know they do. And there’s 40,000 of them, and they’re doing it over and over and over. And our teachers especially are doing a great job in many ways,” Justice said today in response to a MetroNews question.
“Those people are absolutely doing anything but getting rich at the pay grade that they’re getting. And so if we can do anything to minimize or eliminate the burdens of additional PEIA and medical costs that are eating people’s lunch, we need to do it.”
PEIA is anticipating the need to make up an additional $113 million next fiscal year because of the financial pressures of increased medical and pharmaceutical costs.
Public employees in the plan could face premium increases of 14% for the state fund or 16% in plans for local governments. And the agency is considering possible increases in deductibles of 40% — on average more than $300.
Additional proposed cost increases for people with the insurance, including a bump in the surcharge for spouses to $350 from the current $149, are meant to help PEIA make up the amount.
Fred Albert, president of American Federation of Teachers-West Virginia, said today that he concurs with the governor’s comments about providing pay raises to help make up for the increased insurance costs.
“I agree with Governor Justice’s position that the proposed PEIA increases will be a huge burden on education and public employees, and the next governor should support another pay raise for these hard working public servants,” Albert said.
“However, I think that our elected officials should get serious about finding a dedicated funding stream for PEIA so future pay raises can be fully realized by employees and not eaten up by PEIA increases.”
The proposed cost increases were laid out during a meeting last week of the PEIA Finance Board. The full decision-making process will be laid out over additional weeks.
The cost pressures for insurance have occurred after legislation passed to mandate that the insurance plans snap back to an 80-20 cost split between the government employer and insured employees. Those 2023 changes to PEIA also responded to complaints that healthcare providers were having trouble making ends meet because of the state insurance’s traditionally low reimbursement rate. Lawmakers passed a bill making reimbursement rates for medical providers up to 110 percent of the federal Medicare rate.
In past years, the Justice administration in cooperation with the Legislature offered pay increases to public employees to make up for increasing insurance costs.
“Because medical costs continue to go up and up and up, we changed the structure to an 80-20 plan to be more in line, but to do that we knew it was going to cost our employees money. So we really pushed really, really hard for the additional pay raises and we got them,” Justice said today.
“So the net cost as far as healthcare to the folks since I’ve been here is basically zero. And in addition to all that, they’ve gotten very, very wonderful pay raises that the last couple of go-rounds may have had to cover their medical increases.”
An average 5% pay raise approved by state officials last year came was described as amounting to about $130 million.
But after a series of personal income tax cuts, state revenue collections have been running flat over the first three months of the current fiscal year.
Justice’s second and final term is coming to an end at the conclusion of this year, and he is running for a seat in the U.S. Senate. The candidates running to take over as governor are Republican Patrick Morrisey, currently the attorney general, and Democrat Steve Williams, the mayor of Huntington.
A review of PEIA’s proposal will occur at the next PEIA Finance Board meeting scheduled for next week, Oct. 24.
Then representatives of PEIA will take the plan out for public comment to several communities around the state in mid-November.
By Jan. 1, the Finance Board is supposed to provide an approved plan to state officials.
“They’re proposing what they have to propose. You know, that’s how it’s all set up. So from the standpoint of PEIA, if we don’t watch out, medical costs continue to rise — on and on and on. The Legislature passed an 80-20 bill They’re proposing what they have to propose,” Justice said in response to a question by WSAZ reporter Curtis Johnson.
“The net of the whole thing is just this: What did Jim Justice do? He knew that the healthcare costs on our people, the burden on our people, was going up. He fought tooth and nail until he couldn’t fight any more to get everybody those pay raises.”
The governor concluded, “When it really boils right down to it, all I can say is, I’m only going to be your governor another two or three months. If Jim Justice were your governor, hands down he would fight tooth and nail to do additional pay raises to offset these costs because people can’t stand but so much; that’s all they can stand. So I think we’ll do that.”