Sen. Ryan Weld, R-Brooke, speaks on the Senate floor. Photo by Will Price/WV Legislative Photography.

Earlier this month, when lawmakers were still preparing to come to Charleston for the legislative session, WVU Medicine Wheeling Hospital dropped a bombshell: it would stop taking the state’s public employees’ health insurance. Almost immediately, lawmakers promised action and on the first day of the session, state senators passed a bill to increase the amount the Public Employees Insurance Agency, or PEIA, reimburses hospitals. 

But even the bill’s lead sponsor, Senate Majority Whip Ryan Weld, R-Brooke, acknowledged that the bill was “a short-term fix to what are significant, systemic issues within PEIA.”

More than 200,000 public employees in West Virginia, including all state employees and public school teachers, rely on PEIA for health care for them and their families. Frustrations over the program’s rising premiums and declining quality of care were a driving factor for the nine-day teachers’ strike in 2018. But since then, the agency’s financial crisis has only gotten worse. 

This year, lawmakers say they’re prepared to act to shore up the program, beyond the increased reimbursement rates. But at this early point of the session, one potential PEIA reform that has long been requested by advocates is noticeably absent from early legislative discussions: increased permanent funding. 

While advocates argue that with the agency currently in a deficit and a massive shortfall looming, legislators need to work to stabilize the program financially, Republican leadership is countering that giving the agency more money won’t fix the agency’s numerous crises. And so far the beginning of the session suggests that those who want more permanent funding for PEIA might leave disappointed.

‘We cannot continue to try to find temporary fixes’

Requests to increase funding for PEIA date back years. In 2019, a PEIA Task Force convened by Gov. Jim Justice after the teachers’ strike issued a series of recommendations for fixing the insurance program, including a call for state funding in their suggestions. 

But that recommendation, along with others proposed by the task force, was never implemented. Instead, the only recent source of additional PEIA funding has been a $105 million stopgap proposed by Justice and approved by legislators in 2019, which was then used to create the PEIA Rainy Day fund.

However, PEIA’s expenses have continued to increase annually amid a years-long freeze in premium increases. The trend is driven largely by rises in medical inflation and the increasing costs of prescription drugs, and have helped push PEIA into a $92 million deficit in 2022. And with the rest of the 2019 rainy day fund set to be drained by the end of 2024, health care advocates argue that the state needs to get serious about increasing PEIA’s funding soon. 

“What we see the state doing is trying to get away with funding PEIA at a flat level, seeing that they have a shortfall year after year, and trying to fill it in with stopgap measures,” said Kat Stoll, the policy director for West Virginians for Affordable Healthcare.

“We cannot continue to try to find temporary fixes and one-time allocations to address PEIA budget shortfalls,” she added.

Still, one-time allocations continue to be the preferred method of addressing the issue. Last week, during his annual State of State address, Justice announced an additional $100 million allocation for the PEIA Rainy Day Fund, a move that will help the agency fill some of the projected $200 million shortfall it will have in 2025. But the money might not go much further than that. 

A recent analysis from the West Virginia Center on Budget and Policy noted that given the extent of the damage, PEIA premiums would have to rise more than 50% to fully cover the cost of the $376 million shortfall that is expected by 2027. And while the state’s current requirement that insurance costs be paid at an 80/20 split between employers and employees means that the state will have to bear much of the financial costs of those potential changes, experts argue that premium increases would be harmful to public employees currently dealing with inflation and stagnant salaries. 

This has fueled the argument that with West Virginia currently experiencing a budget surplus, the state should move to increase state budget appropriations for PEIA using money from the General Fund. That process would require the Legislature to change state statute so that instead of the state covering a maximum 80% of PEIA insurance costs, it would now cover 80% at minimum, preventing employees from experiencing sudden spikes in premiums. A similar provision was included in the PEIA task force recommendations but was not adopted.

For legislators, the problem is that PEIA has ‘failed to manage themselves’ 

Just days into the 2023 session, exact plans on PEIA are still taking shape, with more legislation expected to be introduced in the coming weeks according to spokespeople for both the state Senate and the House of Delegates. But early discussions suggest that while PEIA will be a key topic, the focus might be changing how the state’s employee health care plans work rather than increasing funding for the agency.

“I don’t think the Legislature should be managing a health insurance provider. But we will step in when we are forced to and we have been forced to,” Weld said. 

Weld argues that PEIA and Justice bear much of the blame for the agency’s current crises and that years of inaction will force legislators to make changes this session to pull the insurance agency back from the “the precipice of disaster.”

“PEIA is supposed to be their own self-perpetuating, sustaining source of revenue,” he said. “But because they’ve failed to manage themselves directly they’ve lost that.”

Rather than more funding, Weld suggested that senators will likely look at other fixes to PEIA, including potential changes to benefits and potential increases in premiums, an area that health advocates have long feared will make the program more costly and  less effective for enrollees. And while he stopped short of suggesting that PEIA be fully privatized, Weld did note that private insurance programs could offer a possible framework for how PEIA could be adjusted.

In previous years, legislative efforts to bring PEIA in line with the private market — some of which have already been reintroduced this year — have failed to pass and have faced heavy criticism from health policy advocates in the state. 

For now, as lawmakers begin their regular session, advocates argue that the call for more PEIA funding needs to be heeded. “It’s time for us to take this serious,” Dale Lee, president of the West Virginia Education Association, told reporters last week. “It’s time for us to look at PEIA and what we can do for a long-term solution, not year by year.”

P.R. Lockhart is Mountain State Spotlight's Economic Development Reporter.