The finances of the Public Employees Insurance Agency are stable, according to the most recent update, although state officials are still considering a special session to address the program.

Total revenue is $78 million ahead of budget and total expenses are $22 million under estimates as the fiscal year nearly comes to a close, according to information provided at the agency’s most recent financial meeting. The PEIA Finance Board isn’t set to meet again until September, so this will be the last update for several months.

Operating revenue is 8% higher than last year, driven by premium increases. Medical claims expenses are relatively flat, a trendline of 1% from the prior year. Prescription drug expenses have been just slightly above target.

Gov. Patrick Morrisey’s administration has been talking about a special legislative session to address financial pressures for PEIA, which moved last year to institute significant premium increases that go into effect next month.

“We’re doing a deep dive on PEIA right now and we’re analyzing that, and obviously when we get to the right point we’ll update people on the date,” Morrisey said during a news briefing last week. “Right now we’re doing a lot of focus on PEIA for the special session.”

There are about 230,000 participants in the insurance program for public employees.

At the end of Thursday’s meeting of the PEIA Finance Board, West Virginia Education Association President Dale Lee asked about the likelihood of a special session to Administration Secretary Eric Householder, who was presiding over the meeting.

“There’s been a lot of talk all year about a special session for PEIA. Are we any closer to that, or do you have any knowledge of that?” Lee asked.

Householder responded by describing a possible time period of mid-July.

“We are working providing data to the governor. There’s been no decision on what to do, just providing data, having roundtable discussions, that’s all we’re doing right now,” Householder said.

Lee followed up: “Do you have any idea if this roundtable discussion is going to include people that are affected? Are we going to have a seat at the table?”

Householder replied, “I suspect you’ll see something. You’re going to have to have buy in from all parties.” He added, “But I don’t think we’re at that point yet.”

A statewide teachers strike erupted in 2018 over the rising cost of insurance versus flat pay. Then-Gov. Jim Justice called for a PEIA task force to make recommendations. The task force’s final recommendations, as Lee has said many times, were never put into effect.

Instead, Justice promoted a series of pay raises for public employees while also working with the Legislature to establish a PEIA reserve fund of more than $100 million that could be drawn down to keep premium increases at bay. Justice, at the time, said there would be no PEIA rate increases on his watch.

Over time, the reserve wound down. And in 2023, during another go-round of financial strain, the Legislature moved ahead with several reforms.

Those changes included a mandate that the insurance plans snap back to an 80-20 cost split between the government employer and insured employees. That ratio means that if costs go up for medical and pharmaceutical claims, then the pain is shared at a ratio that is locked in.

The Legislature also established a surcharge for spouses on the program.

The 2023 changes also responded to complaints that healthcare providers were having trouble making ends meet because of the state insurance’s traditionally low reimbursement rate. Lawmakers passed a bill making reimbursement rates for medical providers up to 110 percent of the federal Medicare rate.

All of that plus factors like rising interest rates resulted in premium increases going into effect in July.

 Specifically, state employees will face a 14% premium increase, while local government employees will see a 16% increase. Retirees will experience a 12% premium increase. 

“We have to get a handle on the prescription drugs nationally, not just West Virginia. We have to get ahold of that nationally. The costs are continuing to rise. Our educators received their statements this past month, how much their insurance is going to go up next year. It gave many of them sticker shock,” Lee said.

“We can’t continue to have the employees bear the brunt of this.”

Lee asked for public employees to be a part of any proposal that is developed for PEIA. He praised PEIA’s staff for its knowledge and responsiveness.

And he said the program should not be moved toward greater privatization. PEIA is mainly a structure for managing contracts with insurers already in the private sector.

“So I hope that we continue to fight against privatization,” Lee said. “While there are a lot of things that we need to change, a lot of things that we need to work on, we still have the best system going.”