Last Spring, Governor Justice formed the West Virginia PEIA Task Force which was set up to find a long-term solution to the issues facing the West Virginia Public Employees Insurance Agency, namely the growing cost of health care for teachers and other public employees.
The deadline for the task force’s recommendations was this week, and while some recommendations were approved, the big issue was left unaddressed.
To maintain current benefit levels, PEIA needs $50 million in additional funding every year, meaning it needs $50 million this year, another $50 million on top of that next year, and so on. This is largely because PEIA health care costs are expected to grow at an annual rate of 7.5 percent, with the prescription drug costs being the biggest driver of increases at 11.5 percent growth each year.
This $50 million question was left unresolved by the task force, prompting Governor Justice to extend the task force to continue working. Before the task force was put together, legislative leaders were opposed to new taxes as a source of funding for PEIA. But after 10 months and no solution in sight, it’s clear that the legislature will have to find the will to raise revenue to address the additional funding PEIA needs over the next few year, or at least not pass additional costly business tax cuts. Particularly as budget officials have warned that West Virginia’s recent revenue windfall is unlikely to last.
If additional funding is not found, health benefits for public employees, one of the leading causes of the teacher strike, will suffer. At current estimates, PEIA projects that employee premiums will increase by 20.6% in 2021, 10.2% in 2022, and 9.5% in 2023, for a total increase of 46.5% over three years.
So for the typical single state employee who currently pay a premium $94 per month would pay $137 per month by 2023, an annual cost increase of $514. For a typical family plan with a current premium of $291 per month, by 2023 the monthly premium would increase to $423, or an annual increase of $1,590.
So while the intent of the task force is to avoid a premium increase, according to Governor Justice’s Chief of Staff Mike Hall, premium increases of benefit cuts will be hard to avoid without new sources of revenue.
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