Statehouse Beat: Don’t blame PEIA board for proposed cuts

You are here

Statehouse Beat: Don’t blame PEIA board for proposed cuts
By Phil Kabler, Charleston Gazette-Mail

One of my most bitter childhood memories was a spanking I received for something I hadn’t done. Some years later, I realized dad had inflicted the spanking to cover up his own culpability in the matter.

I thought of that with the ongoing verbal “spanking” of the Public Employees Insurance Agency Finance Board by Senate President Bill Cole and House Speaker Tim Armstead for the board’s audacity in seeking state funding to help offset $120 million of pending cuts in health care benefits for teachers, public employees and retirees.

Cole issued a statement blaming the board’s “bad decisions,” “poor management,” and willful ignorance of problems with the plan, while Armstead said the board “passed the buck” and was using calls for additional state funding as a “political football.”

However, when pressed to explain exactly what the Finance Board has mismanaged or what it should have done, the leadership’s rhetoric gets extremely vague.

Bottom line, PEIA executive director Ted Cheatham and the board have made clear for a number of years that PEIA needs to increase premiums.

Cheatham has repeatedly noted that PEIA provides about $1 billion of medical and pharmaceutical benefits each year to more than 200,000 active and retired public employees, and with medical and drug costs increasing at rates of 5 to 6 percent a year, an additional $50 million or so of funding is needed annually to maintain the plan.

(That’s even with some fairly innovative cost-cutting and wellness programs PEIA has initiated, which in 2013 temporarily resulted in a drop in medical and prescription drug costs — even as those costs continued to trend up nationally.)

What the leadership seems to be missing is that the PEIA Finance Board does not have the authority to raise premiums. That authority rests strictly with the governor and Legislature, through increasing the state’s contribution for the employers’ share of premiums, which has been frozen at $422.4 million since 2012.

(Cole faulted the Finance Board for spending down PEIA reserve funds, but with no additional state funding forthcoming, that was the only option to forestall benefits cuts.)

PEIA’s financial picture should come as no surprise to the Legislature. Among other information, PEIA provides a monthly financial report to the Joint Committee on Government and Finance — or at least, used to, before the current leadership decimated the interim committee process.

Arguably, the Legislature could have softened the blow by increasing funding for PEIA premiums by $30 million to $40 million a year to avoid the current scenario of needing to come up with $100 million or more to avoid imposing the pending “draconian” cuts in benefits and increases in costs for teachers, public employees and retirees.

We can blame a Democratic governor and Legislature for choosing not to increase PEIA funding in 2013 and 2014, but the GOP-controlled Legislature in 2015 also chose, in Armstead’s words, “to kick the can further down the road.”

In the 2016 session, the Legislature can either man up and find funding for PEIA — Delegate Frank Deem, R-Wood, has a plan for a $1-a-pack increase in the cigarette tax — or can stand by and allow health coverage to become unaffordable for many public employees. Blaming the Finance Board for not taking actions that are beyond its purview accomplishes nothing.