AP NEWS

Cheatham: $105M fund will keep PEIA solvent until 2021

March 23, 2019

CHARLESTON — With $105 million ready to be deposited into a newly created reserve fund, West Virginia’s Public Employees Insurance Agency will be able to get through the 2020-21 plan year without needing premium increases or benefits cuts, PEIA Executive Director Ted Cheatham said Thursday.

However, he said of the following plan year, “We definitely will need new funding in 2021.”

That likely will be in the $50 million to $80 million range, Cheatham said.

In his State of the State address in January, Gov. Jim Justice pledged to provide an additional $150 million in state funding for PEIA, a health insurance plan that covers about 230,000 West Virginians.

That was in light of the failure to date of the PEIA Task Force he appointed last year to come up with a long-term “fix, not a freeze” for rising PEIA costs.

The PEIA Task Force last met Jan. 8, with plans to meet again shortly after Justice’s State of the State address.

However, it has not met since, and it has no meetings scheduled through April.

Justice’s proposal to raise $45 million of that promised $150 million by assessing state agencies a per-employee charge was rejected by the Legislature.

Lawmakers did approve legislation creating the PEIA reserve fund (House Bill 3239) and transferring $105 million of 2018-19 budget surplus to start up the fund (House Bill 2665).

That should be enough to tide PEIA over into 2021, Cheatham said, despite the PEIA Finance Board adopting recommendations by the task force to enhance insuree benefits, the largest bearing a $26.5-million-per-year price tag to eliminate penalties on insurees who go out of state for medical care.

Part of the reason the $105 million will tide the plan over into 2021 is that PEIA is having a good 2018-19 plan year, with lower-than-expected medical and pharmaceutical costs, PEIA Chief Financial Officer Jason Haught told the agency’s Finance Board on Thursday.

Through Jan. 31, medical claims are running $8.9 million below projections and $9.88 million below the same point last year, while pharmaceutical costs are running $28.7 million below estimates and $6.6 million below last year, he said.

Part of that cost savings, Haught said, can be attributed to a slight decrease in the numbers of public employees insured through PEIA, as public schools and some state agencies have seen staffing decreases. Public schools employment is based closely on total student enrollment, which has been declining for several years.

“We were worried when we first started seeing this reduction in enrollment that we would be stuck with sicker folks,” Haught said. “We’re losing enrollment, but we’re retaining positive, healthy enrollment to help fund the unhealthy enrollment.”

He said the plan also is benefiting from small growth, $1.68 million, in investment earnings, a turnaround after it appeared not long ago that the plan’s investments would sustain losses in the 2018-19 budget year.

“We’re just happy to be in the black at this point,” Haught said.

Meanwhile, Cheatham said PEIA will launch wellness initiatives in the coming weeks, including expanding its popular Naturally Slim weight-loss program to an additional 1,000 to 1,500 participants.

“I have no intention of relaunching Go365,” he stressed, referring to the highly unpopular wellness tracking program that was canceled just months after its soft launch following a torrent of criticism that it infringed on participants’ privacy rights and would have imposed financial penalties on those who failed to achieve fitness goals.

Reach Phil Kabler at philk@wvgazettemail.com, 304-348-1220 or follow @PhilKabler on Twitter.