CHARLESTON — For a third year, the PEIA Finance Board on Thursday tentatively adopted a benefits plan that features no changes in premiums or benefits for its insurees.
“We’re not doing a thing. We’re just sitting idle,” Ted Cheatham, executive director of the West Virginia Public Employees Insurance Agency, said of the proposed 2021-22 benefits plan. “No changes to premiums. No changes to benefits for any of the sectors we serve. No changes for one more year.”
However, the PEIA finance plan projects the need for an 8.4% premium increase in the 2022-23 plan year and for a 14.4% increase in 2023-24. Cheatham said the increases could be partially offset by a $105 million PEIA Rainy Day Fund created in 2019 that has yet to be tapped.
Cheatham said that fund is controlled by the governor, and it is not clear if expenditures from that fund would trigger PEIA’s 80-20 rule, which requires any increase in employer contributions to PEIA be matched by an increase in employee premiums on an 80%-20% ratio.
West Virginia Education Association President Dale Lee told board members that, while state teachers appreciate that there will be no plan changes in the coming year, “Our concern at WVEA is what’s going to happen after the 2022 fiscal year?”
Lee said Gov. Jim Justice set up the PEIA Task Force in February 2018 to help resolve a statewide teacher walkout and directed task force members to come up with long-term funding solutions for PEIA.
On Thursday, Lee told the board, “I’m a member of the PEIA Task Force that has not met since January of two years ago.”
The task force last met Jan. 8, 2019, and one of its last proposals at that meeting was a controversial change to the 80-20 rule that would cap future employee premium increases. As Lee noted Thursday, the Wests Virginia Legislature has never taken up bills that would have enacted that and other changes proposed by the task force.
A third consecutive year with no PEIA premium increases was made possible, in part, by lower-than-expected medical and pharmaceutical costs in the 2019-20 plan year, which ended June 30.
Medical claims costs of $429.56 million were about $12.15 million below the budgeted amount for 2019-20, and prescription drug claims of $141.47 million was $13.4 million below budget.
That helped leave PEIA with a year-end net of $225.4 million, about $38.2 million more than projected.
At the board’s last meeting, in June, PEIA chief financial officer Jason Haught had projected a downturn in costs, saying any increased costs for COVID-19 testing and medical care for PEIA insurees would be offset by a drop-off in elective medical procedures during the coronavirus pandemic.
“We will see spiked utilization of services with the pandemic, but we also will see a decline in elective services,” he said at that meeting.
PEIA will conduct a series of public hearings on the proposed plan in November, and the Finance Board will meet Dec. 17 to give final approval to the 2021-22 plan, which will go into effect July 1, 2021.
Also Thursday, Cheatham insisted that a planned rebid of PEIA’s Medicare Advantage Plan program is routine.
“This is business as usual,” he said. “There is no financial issue. There’s no quality issue. There’s no service issue. It is simply our duty to bid this out.”
Humana currently has the contract and is expected to bid on the new contract, which would go into effect Jan. 1, 2022.
Cheatham said that, regardless of the outcome of the bidding, plan benefits will not change.
“Everybody in the world has changed benefits providers, unless you’ve been in PEIA from soup to nuts,” he said. “Everyone working for a private employer has changed plans at some point.”