Efforts to Privatize PEIA are Misguided or Punitive

This legislative session at least four bills have been introduced that would abolish or privatize the Public Employees Insurance Agency (PEIA). All seem to be rooted in one of two premises: (1) health insurance could be better and more affordable if privatized; (2) the state no longer wants the expense of self-insuring employees anymore. If the former, lawmakers are likely underinformed about the cost of health insurance on the private market, both in terms of premiums and out-of-pocket costs employees would be forced to absorb. If the latter, they would be ending a decades-long commitment from the state to public employees that while wages are modest compared with other states and the private sector, their benefits will be of the highest quality.

Note: As of March 18, 2025, none of these bills have been considered in committee, but the WVCBP wanted to address some of the assumptions that underly these proposals for workers and members of the public who would be impacted by them.

PEIA-related Bills Introduced in the 2025 Legislative Session

HBs 2965 and 2968

HBs 2965 and 2968 would end PEIA and “redirect” current costs to public employees in the form of monthly Health Savings Account (HSA) contributions of a flat $1,100. Because HSA contributions must be paired with an HSA-eligible health plan and no such plan is contemplated in the legislation, it is likely the bill sponsors meant to refer to Health Reimbursement Accounts (HRAs). HRAs are health plan contributions that reimburse an employee’s medical expenses up to a maximum dollar amount, and these contributions may include premiums and cost-sharing for individual health insurance coverage.

This change would mean public employees would no longer benefit from the health insurance prices available to large employer groups/economies of scale. Instead, they’d have to purchase a full price plan on the individual market.

In a situation where PEIA was converted to this type of program, most public employees and their families would likely have to pay directly for health costs, incur significant risk going uninsured, or purchase health insurance on the individual market, where they’d be ineligible for tax credit subsidies through the Affordable Care Act that helps make plans more affordable (in some rare cases, they would be eligible for subsidies but would have to forfeit the HRA reimbursements).

This is where we can see that the $1,100/month envisioned in this legislation does not go very far. Here are some examples of full-price health insurance plans on the individual market. You can look up how you would be impacted by visiting healthcare.gov/see-plans (make sure you look at full-price plans)

Considerations

• In very few scenarios would the $1,100/month reimbursement HRA cover the full cost of a health insurance premium for an individual or family and if it did, it would come with a much higher deductible and out-of-pocket costs than PEIA currently has. As evidenced by the examples above, some single public employees may be able to cover the full cost of a health insurance plan with $1,100/month, but would incur deductibles nearly 20 times higher than that in PEIA for single coverage. For a single member to get a plan comparable to PEIA, the $1,100/month would fall short of the full cost of the premiums. Any PEIA members with spouses or dependents would be in the negative with premiums even at the lowest cost plans on the individual insurance market.
• The legislation does not provide for inflation-adjusting the monthly HRA contribution employees receive, meaning as health insurance premiums go up every year, the funding amount would stay flat until lawmakers went back and changed the law again.
• The Affordable Care Act (ACA), which provides pre-existing condition protections and requirements that plans on the individual health insurance market provide comprehensive benefits, is under attack in Congress right now. Proposed changes in Congress, by the Trump administration, and via legal challenges could lead to these plans costing even more or providing less generous health coverage benefits, issues that do not impact PEIA in its current structure.

HB 2623 and SB 426

These bills both seek to privatize PEIA, requiring the state to contract with a group health insurance provider. If these bills keep the current 80/20 employer/employee split, it is unlikely that they would result in savings to the state or to the employee, as plans on the employer market in West Virginia have higher premiums and out-of-pocket costs on average.

In FY 2025, the average total PEIA health insurance premium for employee-only coverage was $741/month, with an average deductible of $510. In calendar year 2024, the average monthly premium for employer-sponsored coverage in West Virginia was $766/month, with an average deductible of $1,931.[1]

For employee plus dependents coverage, the average total health insurance premium in PEIA in FY 2025 was $1,551/month, with an average deductible of $1,037. In calendar year 2024, the average monthly premium for employer-sponsored coverage in West Virginia was $2,209/month, with an average deductible of $4,457.[2]

Employee Only Coverage

Employee Plus Dependents

Under these scenarios, assuming the state kept the commitment to an 80/20 cost-sharing split, the state could actually see higher insurance costs for comparable coverage or employees could expect much higher out-of-pocket costs.

While growth in PEIA costs have been a longtime concern of policymakers and the public, data shows that PEIA costs grow much more slowly than small group commercial coverage in West Virginia. The only insurance program in the state with lower annual growth is Medicaid.

PEIA is an incredibly important program for over 250,000 West Virginians who rely on it for health coverage. Policymakers must keep their commitment to providing high-quality health insurance for the public servants in our state by getting serious about permanent, sustainable funding mechanisms for the program.

[1] WVCBP analysis of PEIA, Pew Trusts, and Kaiser Family Foundation West Virginia health insurance premium data.

[2] Ibid.