Sen. Tom Takubo, R-Kanawha, speaks on the Senate floor this session. Photo by Will Price/WV Legislative Photography.

Lawmakers made a small, but important, change to how Medicaid will be funded in the future. But first, a bill that lawmakers are advancing means public employees could soon have to pay more for health insurance.

Higher PEIA premiums on the horizon

For the more than 200,000 public employees who rely on the state’s health insurance agency, their premiums may soon go up. Lawmakers are also advancing a pay raise for state employees but union leaders say they’re worried that it might not offset premium increases now and in the future.

On Saturday, the state Senate voted 29-4 to pass SB 268, which aims to change the Public Employees Insurance Agency, or PEIA. The bill makes a number of changes to the agency, including a mandate that PEIA return to an 80/20 split in insurance costs between employers and employees by July 1 of this year. 

Legislators argued that a yearslong freeze on premiums has left the state paying around 83% of insurance costs, leading to increased expenses for the agency and strained finances. Under current policies, PEIA faces a looming $376 million budget shortfall in 2027.

The increase in premiums has been framed as a necessary measure to help preserve the financial future of the insurance agency. But during the legislative session there has been limited public discussion of the exact impact that the shift would have on those who rely on PEIA, including the 20,000 teachers who went on strike in 2018 over high premiums and other insurance costs. 

Lawmakers have instead focused on making the case that after years of frozen costs, it is necessary that premiums go up.

 “This bill, yes. It raises premiums and that’s OK,” said Sen. Mike Maroney, R-Marshall, chair of the Senate Health and Human Resources Committee. “That’s what every health insurance plan does.” 

Senators said that they hope two measures increasing state employee pay will limit the impact of premium hikes. The bills, which were passed by the Senate Saturday, would increase pay for state employees by $2,300. 

Lawmakers said that these raises, when coupled with proposed tax cuts, would return money to employees and leave them in a better financial position in addition to offsetting the premium changes.

“I think that trade gets us back to net neutral,” Gov. Jim Justice, who notably froze premiums after the 2018 teachers strike and pledged that they would not rise during his time in office, told MetroNews’ Talkline on Monday. “Everybody knows that PEIA needs a permanent, ongoing fix.”

Some unions aren’t convinced. They argue that the PEIA changes will increase employee premiums by as much as 26% in the near future, and that the current pay raise will not address future premium increases. 

“Without providing solid numbers or clear answers, the Senate is bundling a pay raise bill with what appears to be very painful insurance increases in the hopes that it will lessen the blow to public employees,” West Virginia AFL-CIO President Josh Sword said in a statement. 

–P.R. Lockhart

Under-the-radar budget change could impact Medicaid in years to come

Senators debate the budget bill. Photo by Will Price/WV Legislative Photography.

When the state senators passed their budget bill, they made dozens of changes to account for their plan to cut income taxes. While some of those recent changes have obvious consequences on state-run programs, one of the more nuanced adjustments was how West Virginia lawmakers plan to pay for Medicaid. 

Under the proposal, $264 million of the low-income federal insurance program’s expenses would be removed from general revenue funding this year. That funding, at least for this year, would come from the state’s surplus, recently estimated by the state budget office at just under $1 billion.

While Medicaid expenses will likely be paid for this year, they may be in jeopardy of not being funded in the future. Kelly Allen, executive director of the West Virginia Center for Budget and Policy, said that assigning the cost to the surplus puts it at risk of going unfulfilled after 2023.

“After this year, when the tax cut is potentially phased in, when temporary factors start to subside…I think there will be tough decisions that have to be made,” she said.

If the state doesn’t have a surplus in the future, West Virginia’s Medicaid wouldn’t just lose $264 million – around 60% of the total state general revenue contribution. Because the federal government contributes money to programs based on what states invest, the total loss of funds would likely total well over $1 billion.

That billion-dollar loss would be felt by the over 600,000 West Virginians who use Medicaid, plus many who could become eligible soon. It may come in the form of state residents losing coverage for health needs that already go unmet and lower service reimbursement rates that may lead providers to stop accepting the insurance altogether. 

“Shifting it to the surplus is concerning and just makes us wonder what the plan is in future years,” Allen said. “It prioritizes tax cuts over ongoing spending needs that help families and kids.”

–Allen Siegler

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

Allen Siegler is the public health reporter for Mountain State Spotlight. He can be reached at (681) 317-7571.