PEIA Board Fights Budget Bill

Mar 11, 2016

With less two days left in the 2016 Legislative Session, members of the Finance Board for the Public Employee’s Insurance Agency, or PEIA, have serious concerns about the changes to the state budget with regards to the agency’s funding.

House Finance Chairman, Eric Nelson
Credit Perry Bennett / West Virginia Legislative Photography

The budget bill, containing a line item to take $67 million dollars from the state’s rainy day fund and other special accounts in order to fund PEIA, was debated for several hours on the House floor Friday.

During this session, the Democratic Party has criticized the majority for ignoring the need for additional funding to PEIA, while some Republican members argue the current budget does fully fund the program.

In a press conference this morning, six people spoke in direct opposition the current budget bill, saying there is no agreement between the House and Senate leadership on how to fund PEIA, an agency that provides health care coverage for more than 230,000 West Virginians.

Joshua sword is Secretary-Treasurer for West Virginia AFL-CIO and a member of PEIA Board.

"We’re facing roughly $50 million to $60 million dollars in inflation every year, as well as adding new people to the book, so we’re roughly $100 million short for the next plan year," Sword said. "The legislature promised us that they were going to come up with a dedicated revenue stream for 2016 and beyond and here we are at days 59 and 60 and they haven’t done that.”

PEIA has seen no additional funding for the past few years, yet an increase in membership and rising prices. In previous years, the agency was able to offset benefit reductions with reserve funds, which came from what could basically be considered a savings account the agency built up with excess revenues over the years. Sword says dipping into the one-time dollars is a temporary fix, one that will leave the program even worse off next year.

“The problem that creates is that it might make it okay or doable for the plan year 2017, but when we start talking about plan year 2018, we have to make up that $67 million plus the additional rate of inflation we’re facing for the following year," Sword said. "It puts us right back in the same place where we were when we start this discussion a few months ago, at roughly $120 million in benefit reduction for the next year.”

House Finance Chairman, Eric Nelson, defended his committee’s budget on the floor Friday, saying they had to consider all options in the extremely tight budget year.

“I will say that our budget is in very difficult time right now," Nelson said. "Whether it be revenue measures or other expense cuts, or additional cash sweeps, all of those are on the table and need to be on the table. A 60-day session is not sufficient time for this body to be prudent.”

Other Republicans defended the measure as well, including Delegate Michael Ihle, who is also the mayor of Ravenswood.

“We’ve heard a lot about 1 in 6 or 1 in 7 West Virginians, who get PEIA," Ihle said. "What about the other six out of seven? Many of whom have had their insurance skyrocket by a lot more than 12 percent, if they’re even lucky enough to have insurance.”

Earlier this session, a bill was killed in the House Finance Committee that would have increased the tax on a pack of cigarettes by one dollar. The Senate had approved the tax and dedicated some of the revenues to the PEIA reserve account, allowing the program to help sustain itself into the future.  Both Democrats and Republicans voted against the bill in the Committee.