Five big issues for the PEIA Task Force
By Brad McElhinny | WV MetroNews
CHARLESTON, W.Va. — When the new PEIA Task Force gets under way, it has its work cut out for it.
The 29 members of the newly-created task force will be together at the crossroads of healthcare, insurance and economics.
And eventually they’ll have what could be the biggest challenge of all — agreeing with each other.
It all starts Tuesday with a tipoff meeting that’s mostly meant to be organizational.
“I think at the end we’ll have to define that everybody agrees that this is how this plan should be administered, this is what should be offered, this is how it should be paid for,” said Mike Hall, the chief of staff with the Justice administration, who will lead the task force.
But the end will come months from now.
First the Task Force has to learn more about the Public Employees Insurance Agency.
“You have to know what it is before you know what you’re fixing,” Hall said. “We’ll explain in detail how PEIA works.”
Consultant Tom Susman, a former PEIA director who is not on the task force, agrees.
“You have to say, ‘What are our costs? What are our trends? How many employees are on the plan? Is it going to stay stable or not?'” Susman said. “I’d say probably for the first three meetings they should be doing major data drops.”
Dale Lee, president of the West Virginia Education Association, said the most learning may be done on the road.
Public hearings are expected to take place all over the state during the months the task force does its work.
“You’ve got to hear from the people to determine the things that need to be looked at,” Lee said. “The more we hear from the people will open our eyes to the parts of the plan that really need to be looked at.”
Here are five of the big issues the PEIA task force might consider:
What to do about the 80/20 rule?
This is a mathematical issue and one that directly affects the pocketbook.
It’s the formula in state code where the state puts in 80 percent and the member comes up with 20 percent. So when the state puts more money into PEIA, the ratio means premiums go up for those who are insured.
Earlier this year, officials considered changing the statute. Gov. Jim Justice also spoke of this possibility earlier this year when talking about PEIA.
Susman suggested an early step for the task force should be getting a grip on exactly where funding currently stands.
“They need to figure out exactly where they are on a percentage basis,” he said.
Lee said the 80/20 rule is a natural area of discussion.
“That’s something I think we definitely need to look at,” he said.
What to do with retiree subsidy and whether to restructure.
“This plan not only deals, for example, with current employees but it extends on our into your retirement years,” Hall said. “And there are aspects of PEIA as if it’s almost a lifelong plan that other plans don’t have.”
Lee says the insurance plan has been a promise for public employees that it will help with their medical needs into their retirement years.
“We have to make sure we contain the cost for retirees,” Lee said. “For the last few years their costs have gone up and they get no cost of living increase That’s unfair for people who gave their lives to the state have to decide if they’re going to buy medicine or pay their utility bills.”
Premium tiers and total family income.
This was a hot button issue for teachers who walked out of schools all over the state this year.
In an attempt to control costs, the PEIA Finance Board had planned to reduce the number of plans from 10 tiers to 5, as well as consider total family income to determine premiums.
PEIA is unique in the first place in that it is based on the subscriber’s ability to pay.
“One of the most critical things about the PEIA plan is this: the law says this is an ability to pay type premium structure. I can’t find another one in the United States,” Hall said.
Susman sized up the total family income problem this way: two state employees have the insurance. One has a spouse who works at a low-cost retailer. The other’s spouse is a brain surgeon. What’s the equitable way to figure out what their insurance costs?
“Because you and I have the same job, in that situation you’re going to pay more for your insurance than I would. That’s wrong, and that is problem,” Susman said.
“The tiers are a problem too. They make sense for low-income folks but there has to be a rebasing of the tiers to get them closer. The only problem is that’s going to require state money, and nobody is willing to do that.”
Lee agreed that these are issues the task force should consider.
“I think the tiers can be looked at, but I don’t know how much tweaking we’re going to be able to do,” Lee said. “I think it was pretty evident that the total family income met with a huge resistance.”
Controlling escalating cost of care (getting people healthier)
West Virginia is not a healthy state, and that’s reflected in its healthcare costs.
PEIA introduced a new program this year that proved to be controversial — Go360.
The program asked employees to keep track of their health habits in exchange for points that potentially result in lower costs. It included a premium penalty of $25 a month for those not earning earn a minimum number of points.
Up against significant pushback, the Go360 program was made purely voluntary.
“Whatever you look at you make it a voluntary plan, not a punitive plan,” Lee said. “We should always encourage people to lead a healthier lifestyle, but you can’t make it punitive.”
Wellness needs to be a constant fight to lower costs, Susman said.
“You have to work wellness and work it hard and continue to educate folks,” he said. “It’s a continual campaign on the part of the agency. It can’t be one and done. I think you can do discounts. You can do incentives.”
Whether to privatize
“We have to answer questions like what about privatization, what about this, what about that,” Hall said. “Who runs this plan? Are we paying them too much money, are we paying them the right amount of money?”
Privatization of PEIA has been the subject of recent conversations, although not particularly seriously.
The comparison is sometimes made to West Virginia’s privatization of workers compensation insurance. The guy who engineered that transition, Greg Burton of BrickStreet Insurance, is one of the members of the PEIA Task Force.
One complication of having PEIA as a state-run program is that reimbursement rates for providers are set, Susman said.
“Everybody says ‘we ought to privatize PEIA,” Susman said.
“The one thing that PEIA has that most third party plans don’t have is the state has what are perceived to be mandated reimbursement levels. So on a per member per month basis, if you would look at the costs to a major employer versus the costs to PEIA I would suggest to you that the provider costs are significantly lower.”
That can complicate matters for those who live in border counties. They may find it challenging to find affordable healthcare at otherwise convenient locations just across the border.
“People in the Eastern Panhandle, it’s much closer for them to go to Winchester than to Morgantown but under the plan they have to pay more to go to Winchester,” Lee said.
Generally, Lee would be interested in expanding coverage areas.
“What I think might be something we could look at is the possibility of expanding the coverage, getting a larger pool that reduces costs,” he said.
He is not interested in pure privatization.
“I’d have major concerns with that,” he said. “It’s a much different plan than workers comp was.
Whatever the state decides to do, Lee suggested, it’s going to cost more money.
That may be the hardest matter for the Task Force of 29 to resolve.
“The funding source is going to be vital. I think we’re not keeping up with the medical rate of inflation,” Lee said. “What we’ve done the past few years is pass those costs on to the