So PEIA Has Approved 50 Million Dollars in Cuts - Here's What You Need to Know

Dec 9, 2016

PEIA is the public health insurance program that covers all state employees and retirees. Teachers, state troopers, and yes, even employees of West Virginia Public Broadcasting are covered by the insurance plans. But here’s the issue: over the past few years, funding from state government for PEIA has stayed the same, while health care costs have been on the rise. Now, PEIA needs an additional $50-60 million each year in order to keep funding the program at the same level.

 

“We are at the point in our lives when we are going to need that new revenue every year,” said PEIA Executive Director Ted Cheatham.

 

“And it’s not just a question of, ‘Let’s do a tobacco tax for $50 million and give it to PEIA this year,’” he continued. “Well, you just took care of this year. Next year you’re going to have to find me a new source of $50 million, and the next year a new source of $50 million, every year…it’s new money to keep it the same.”

 

Cheatham said prescription drug and medical costs are going up by 6-7 percent a year, costing the state more to cover employees. When legislative funding remains the same, it’s the beneficiaries, the people covered by PEIA, who have to make up the difference.  

 

“The major changes are increased deductibles, increased out-of-pocket maximums and a requirement to fill all maintenance medications with a 90-day supply for two co-pays – that’s where most of the money is coming from,” he explained.

 

If everything stays the same, active state employees can expect to see a 7 percent premium increase in 2017 and a 9 percent premium increase the year after that. Retirees are in an even worse position. That’s because their healthcare coverage is subsidized by active employees. But those subsidies are capped at a rate that’s lower than the rate at which medical costs are rising. Also, Cheatham said there are just more retirees and fewer active workers.

 

“The retirees are actually growing, and they grow at about 2,000 a year. The active population is actually decreasing…went down about 800 last year. So that means there’s less people to subsidize more people.”

 

As a result, Cheatham said retirees can expect to see premium hikes of about 28 percent a year starting in 2019.

 

When asked what Cheatham suggested to help prevent yearly increases in premiums he gave a two-fold answer. One: employees do need to have their share changed. He said rising premiums and deductibles are just part of the nature of healthcare today. But, two, the state needs to figure out a consistent revenue source for the insurance provider, or the legislature needs to take a good hard look at  what the program needs to be.

Appalachia Health News is a project of West Virginia Public Broadcasting, with support from the Benedum Foundation.