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CHARLESTON -- The Public Employee Insurance Agency, which covers the health care of state workers, is in good shape in the short-term, but dipping into the $100 million Rainy Day Fund is a possibility toward the end of next fiscal year.
Earlier this week, PEIA Director Ted Cheatham briefed the Select Committee on PEIA, Seniors and Long Term Care on the condition of PEIA during the second day of December legislative interim meetings at the State Capitol in Charleston.
According to budget numbers from the end of fiscal year 2019 that ended in June, the PEIA plan for current employees brought in more than $30 million more than what was budgeted. Cheatham said that any surplus in PEIA stays in PEIA.
"You can see PEIA did pretty well. It was a great year with no real surprises," Cheatham said. "They are used to offset future costs, and that's what's going to help us get through (fiscal year) 21 and 22."
Cheatham said there was little change in enrollment numbers, with both fiscal year 2019 and 2020. PEIA serves over 200,000 active state employees and retirees.
"Really, PEIA has been very flat," Cheatham said. "We've been on a very downhill run the last three or four years in this state. I think a lot of that has to do with vacancies that aren't filled. Lower enrollment in schools has caused the teachers' (PEIA enrollment) to go down."
According to Cheatham, there are no changes to PEIA premiums for state employees, non-state employees or Medicare and non-Medicare retirees for plans in fiscal year 2021 starting July 1, 2020.
However, Cheatham said that PEIA might need to tap into the $105 million Rainy Day Fund created earlier this year by Gov. Jim Justice and the West Virginia Legislature. The extra money needed could be close to $35 million.
"There were no premium increases at all. That doesn't mean we don't need additional money," Cheatham said. "That is going to come from the PEIA Rainy Day Fund. There is no additional ask from the Legislature because the money has already be allocated and accounted for."
The idea for the fund came after the first strike by teachers and school service personnel in 2018, as well as a task force created by Justice to find long-term solutions for PEIA, which is expected to see cost increases of $50 million every year.
After the task force met through the Summer and Fall of 2018 and came up with some suggestions, the PEIA Finance Board ultimately went with a proposal from Justice, which changed Plan A benefits to an 80/20 co-insurance for out-of-state in-network hospitals and facilities for border counties only, or 70/30 for Plan B participants.
The state also removed the maximum facility fee limits for out-of-state facilities, removed a $25 co-pay for out-of-state services, and created an appeals process for people requiring a third-tier non-preferred drugs. The entire package cost $9.8 million to implement starting in July with an approximate cost of $120 million by fiscal year 2021.
The task force was supposed to keep meeting in 2019. Its last meeting was in December 2018. Delegate John Kelly, R-Wood, reminded Cheatham that the last time PEIA spent down a reserve of money caused major headaches for lawmakers starting in 2015.
"Isn't that the reason we got into a financial bind a few years ago, by failure to increase rates and go in raiding the … fund," Kelly said. "It's taken the last five years to dig ourselves out of that hole.
"What I see here is we're turning into a path similar to where we were a few years ago," Kelly said. "If we're not going to increase our rates and we're going to continue to deplete what we have in our Rainy Day Fund, we're going to be back to where we started. I don't really want to go that way."