State and public school employees with health insurance through the Public Employees Insurance Agency could be trading $120 million in severe benefits cuts for about $14 million in higher premiums next year, under a plan adopted Thursday.
Members of the PEIA Finance Board approved an alternate 2017-18 benefits plan on Thursday, relying on Gov. Earl Ray Tomblin’s proposal in the State of the State address to increase state funding for the employers’ share of PEIA premiums by $43.8 million.
However, the plan is contingent on the Legislature approving the governor’s funding proposal this session, which relies on an increase in state tobacco taxes.
The plan adopted Thursday requires an average 12 percent increase in employee premiums, as opposed to the original plan approved by the board in December that would have imposed severe increases in co-pays, deductibles and out-of-pocket maximum payments to close a $120 million PEIA funding deficit.
That option, American Federation of Teachers-West Virginia President Christine Campbell said, would push many employees “down to poverty.”
However, West Virginia Education Association President Dale Lee called the new plan an illusion if the Legislature fails to approve the governor’s funding proposal, which calls for using part of a proposed $71.5 million increase in state tobacco taxes, including a 45-cent-a-pack increase on cigarettes, to fund the increase in employer premiums.
“To think our medical plan hinges on the passage of a tobacco tax really scares me,” Lee said.
Lee thanked Tomblin for making PEIA funding a priority, but said the politics of the whole process is distasteful.
“How many times do teachers, service personnel and state employees have to be a political pawn in the system?” he commented.
The new plan has only a few benefits changes, expected to cost employees a total of about $5 million to $6 million a year. Most significant are new $500 emergency room co-pays for injuries incurred during high-risk behaviors such as riding motorcycles or ATVs without helmets.
“We want to keep those. We think that’s good policy,” PEIA executive director Ted Cheatham told the board.
Retirees would have no changes to their current benefits under the new proposal, but would also have 12 percent premium increases, to match the active employee increase.
Under a law that requires an 80-20 match between employer and employee premiums, the proposed increase in employer contributions will require an average 12 percent increase in employee premiums, Cheatham said.
For single coverage for an employee making between $20,000 and $30,000 a year, that would work out to a $5 a month increase, from $70 to $75, according to PEIA documents.
For family coverage for an employee in the same salary bracket, the premium would go up $22 a month, from $206 to $228, he said.
That would be in place of what Cheatham has described as draconian cuts in PEIA benefits. The plan approved in December that would have sharply increase co-pays, deductibles and maximum out-of-pocket expenses to close the projected $120 million deficit in the health care plan.
That plan would have increased deductibles by $500 for single coverage and $1,000 for family coverage, and raised annual out-of-pocket maximums by $1,500 for single coverage and $3,000 for family plans.
It would have also increased prescription drug costs, most significantly raising the co-pay for preferred brand-name drugs from $25 per prescription to 30 percent of the actual cost.
If Tomblin’s funding plan is not approved by the Legislature — or the Legislature does not come up with a workable alternate plan — board members will have to come back in March to put the $120 million of benefits cuts back into effect.
“It’s very incumbent upon the Legislature to be prudent and take these actions that must be taken,” said Elaine Harris, who represents labor employees on the board.
“We were able to take a plan that was going to cripple families, and now turn it into something that is viable, and I think is something we can all be proud of,” added Josh Sword, who represents education employees.
“This is one heck of a gesture and a commitment from the governor,” he added.
Whichever set of benefits changes are ultimately enacted, the changes will go into effect for retirees on Jan. 1, 2017, and for active employees on July 1, 2017.
Reach Phil Kabler at philk@wvgazettemail.com, 304-348-1220, or follow @PhilKabler on Twitter.