Higher PEIA costs weigh on public employees

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Higher PEIA costs weigh on public employees

Hoppy's Commentary | Hoppy Kercheval, MetroNews

Officials with the West Virginia Public Employee Insurance Agency got an earful and more during a recent series of public hearings on planned changes.  Hundreds of plan members turned out to express their displeasure with the proposed $120 million in benefit cuts.

Their angst is understandable since employees on an individual plan will see a $500 increase in their deductible, while the family plan deductible will rise by $1,000.

Out-of-pocket maximums will increase by $1,500 for an individual and $3,000 for a family.  Drug co-pays for preferred brands will rise from $25 to 30 percent of the cost of prescription.

Retiree premiums will rise by eight percent.  The finance board proposes no changes in active employee premiums.  The Legislature has final say on those.

PEIA Finance Board members listened, but they don’t have many options here.  Health care costs continue to rise, active employee premiums are fixed and the state’s appropriation of its share to the plan has remained static for the last several years at $422 million.

It’s doubtful public employees will get much sympathy from private sector workers.

According to the Kaiser Family Foundation, premiums in employer-sponsored health plans increased 27 percent between 2010 and 2015, while wages increased ten percent.  Kaiser also found that between 2005 and 2015, private sector employees saw their premiums nearly double, while the employer share rose 61 percent.

Enrollees in Obamacare in West Virginia are also getting sticker shock.  Highmark Blue Cross Blue Shield of West Virginia announced earlier this month it’s raising premiums by 24 percent next year.

Still, many public sector workers in West Virginia are low paid, so it’s difficult for them to absorb any increase in costs.  Additionally, public employees have always operated under the assumption that they are trading higher pay in the private sector for better benefits working for the state.

Public employees and the state’s teacher unions will pressure Governor Tomblin and legislators for some relief when the regular session begins in January, but options are limited.  The state budget is growing tighter by the month because of the decline of the coal industry, school teachers and public employees want pay raises and more money is needed for road work.

Some lawmakers are floating the idea of an increase in the cigarette tax from the current .55 cents a pack to $1.55. That would raise at least another $90 million annually.  However, tax increases are always unpopular, especially in an election year.

Or lawmakers could change the premium split from the current 80-20 (80 percent of the cost is paid by the state and 20 percent by the employee) to 75-25.  The high premiums could hold down future increases in out-of-pocket costs.

In hindsight, the benefit cuts planned for next year would have been easier to absorb if the state had gradually raised the employee costs while the Tomblin Administration put a little more money in the budget for PEIA the last few years, but that didn’t happen, and now comes the tough medicine.