For state employees, PEIA is a benefit – an offset for wages and perks they might earn in the private sector. But with pay raises often washed away by rising premiums, many don’t see themselves as coming out ahead. Frustration runs high.
From the outside looking in, though, PEIA looks like a bargain. Those without access – or those who gain it through a spouse – recognize that comparable coverage in the private market costs far more.
Perspective is reality, but it’s the first perspective – the discontent among employees – that creates the political headache for Governor Patrick Morrisey and lawmakers. The need for a fix is made real.
The Governor’s Plan
Veteran newsman Brad McElhinny broke news of Morrisey’s proposal ahead of a possible September special session. The Governor’s office would have preferred to keep it quiet, but lawmakers – skeptical of its practicality and politics – did not.
Point One: Fraud Unit and Pharmacy Benefit Manager (PBM) Negotiations
Two of Morrisey’s points may not need legislation at all.
- Fraud unit: Creating a direct operation within PEIA would add cost and bureaucracy. A third-party administrator or private-sector partner could do it more efficiently and should be already. Ironically, Morrisey just sold four state-owned nursing homes to private operators on the very logic that the private sector runs things better. What changed? No need for the state to do what the private sector can do more efficiently, not to mention the additional cost the state will foot. This move feels more like optics than savings.
- PBM negotiations: A PBM is a third-party company that administers prescription drug benefits on behalf of insurers, employers, and government health plans. PBMs negotiate with drug manufacturers and pharmacies to manage costs, access, and reimbursement rates for medications. If West Virginia is not already leveraging PEIA’s purchasing power to the fullest, why not? If we have 200,000 members today, why would a PBM cut a better deal tomorrow with the same 200,000 members they already serve? A new PBM? Maybe. But those 200,000 members and their buying power is more like a commodity – it can only yield so much value until the economics don’t work. Why would a PBM change rebate structures and percentages or move to pure passthrough pricing without something in return? This piece of the plan is murky at best and minus more detail, seems of little consequence. Admittedly, that could change.
Point Two: 75/25 Cost Split for New Employees
Shifting the employer-employee cost share from 80/20 to 75/25 – but only for new hires –sounds reasonable and is commonplace in the private sector. It preserves commitments to current employees and slowly shifts costs long-term. But in the short term, the savings are probably negligible, since the state isn’t hiring in droves. If the split applied to existing employees, then you’d be talking real money. It doesn’t, so the short-term gains will be unable to meaningfully plug Morrisey-forecasted budget gaps in coming outyears. More concerning is recruitment: in a state already struggling to attract and keep teachers, adding cost pressure makes West Virginia less competitive, especially in border counties.
Point Three: Spousal Surcharge
Morrisey proposes removing coverage eligibility for spouses who are offered health insurance through their own employer. Originally designed to cover the full cost of spouses who could otherwise get insurance through their jobs, the surcharge either hasn’t kept pace or is somehow otherwise problematic. Why bring it up otherwise? Raising it would align policy with purpose. Eliminating it outright, however, risks unnecessary political blowback. Why hand opponents another rallying cry when other parts of the plan already invite controversy, especially the proposed 75/25 split? Could it be a bargaining chip for later negotiation?
Political Reality
Credit Morrisey for putting forward a plan. Status quo rarely produces optimal results. But what we’ve seen so far – granted the Governor hasn’t officially rolled out his full plan – looks more like tinkering than transformation. Short-term adjustments without long-term solutions.
And maybe that’s the real problem: perhaps there are no big levers for the Governor or Legislature to pull. Healthcare is expensive. True innovative approaches are needed, albeit politically challenging. And when has government ever been an innovator? That’s another commentary for another day.
Will lawmakers buy in, knowing the risks heading into the 2026 election? Are they leaking the plan because of their concerns? How will organized labor respond? Can relatively slim cost savings justify the potential loss of young teachers and professionals to neighboring states? Uncertainty abounds.
Grab the popcorn. The PEIA debate is about to take center stage, again.