Making PEIA Worse, Not Better

Striking teachers and school service personnel are demanding West Virginia legislators “fix the PEIA.” To many of the education employees, that seems more important than pay raises.

PEIA stands for Public Employees Insurance Agency, and it provides health insurance for nearly 80,000 active and retired state workers.

All of us who do not have coverage through programs such as Medicaid understand the school employees’ concern. Increases in health insurance premiums and cuts in benefits are a constant worry.

But the PEIA can’t be fixed, certainly not on the current path.

Unless someone has a magic wand — and presidents and members of Congress have been looking for it for years — there is no way to reduce or even hold steady the cost of health care. That means there is no way to keep health insurance costs under control.

Legislators and Gov. Jim Justice have done what they would. They have agreed to take $29 million out of the state’s Rainy Day Fund to avert PEIA premium increases until at least July 2019. That isn’t good enough, say the strikers and their union leaders.

Now, state senators are looking at something else. As you probably know, a bill granting a pay increase to school personnel already has been signed into law. It would provide a 2 percent boost the first year, with 1 percent more in each of the two ensuing years.

Union leaders had demanded 5 percent the first year, and the House of Delegates has approved a bill to that effect. Adding 3 percent would require about $58 million, money the governor says will be available. Senate Finance Committee members are checking his figures today.

But something else is afoot. Some senators are talking about leaving the first-year pay increase at 2 percent, and pumping the $58 million into the PEIA stabilization fund. That account’s exists to use taxpayers’ money to avoid premium increases for PEIA clients.

That could stretch the premium freeze out as far as 2021. Some senators hope the union members would consider that a “fix.”

It isn’t. Insurance costs would keep going up. Someone — taxpayers — would have to cover them.

That approach can’t continue forever. Taxpayers already cover 80 percent of PEIA premiums, leaving the insured employees’ share at 20 percent. That costs the state somewhere between $450 million and $500 million a year — well more than one-tenth of our entire general revenue budget.

So the current approach amounts to what we’ve done for so many years in West Virginia: Don’t try to solve a problem. Just throw more money at it.

What happens if we continue down that road? Taxpayers will have to cover higher and higher shares of PEIA costs. Half a billion a year may seem like the good old days.

Justice has established a task force to look for PEIA solutions. Let’s hope realistic ideas — such as privatizing public employees’ insurance — are considered. It worked for the workers’ compensation system, which for years was an expensive fiasco. Now, under privatization, injured workers get help and employers pay lower premiums.

Other ideas ought to be considered. For example, the PEIA wellness program canceled at the demand of strikers should get another look. It could help by keeping PEIA clients healthier.

Here’s the thing: If PEIA premiums are frozen forever, the cost to taxpayers will increase at a faster rate than might have been the case. Why? Because PEIA clients will have little “skin in the game” to hold health care and insurance costs down. If you never have to pay any more for insurance, what’s the incentive to make it less costly for the insurance company or state agency?

A genuine “fix” for the PEIA is impossible. As matters stand, however, we seem determined to break it even more.

Myer can be reached at: PEIA Worse, Not Better