Justice pushes PEIA Task Force, considers new sources of revenue

CHARLESTON, W.Va. —Gov. Jim Justice wants the PEIA Task Force, which has been meeting for a half-year now, to continue its work aimed at shoring up health insurance for state employees and retirees.

But Justice said in a Friday interview that he’s also working independently on possible changes to the Public Employees Insurance Agency.

He hinted that might have an element of privatization, the way the state dealt with workers compensation years ago, and also that he is looking toward long-term stabilization of the program that he believes is possible because of West Virginia’s improved economic outlook.

The long-term approach might be popular but the privatization aspect — often discussed for PEIA but not acted upon — is likely to be more divisive.

“I’m working, and I don’t know that it will come to a resolution, but I’m working another avenue to basically look at if there’s a way to achieve permanent status of the stay to where we solidify PEIA forever,” Justice said in an interview at the Governor’s Mansion.

“And while the Task Force is working in one direction, I’m working in another direction from a privatization side to completely explore that avenue to see if there’s a possibility of doing this in a BrickStreet way that we did before with workers comp — to see if there’s a way to do it and pull it off.”

Justice said that possibility is not certain. He also said he did not want to provide additional details yet.

“I don’t know,” he said. “I don’t have an answer to that at all,” he said.

“But while the Task Force is working independently of me — and I want them to; they’ve reported back to me a bunch of times — but I want them to work without me pushing them in a specific direction. But I’m working behind the scenes in another direction.”

The governor has made reference previously to an independent approach from the PEIA Task Force, notably during remarks at the inaugural Summit for Educational Excellence.

“You may really be surprised,” the governor was quoted in The State Journal. “You may honestly be stunned at the end of the day.”

Justice established the PEIA Task Force at the conclusion of a 9-day statewide teachers strike. Teachers said rising out-of-pocket health care costs had outpaced their stagnant wages.

PEIA itself is fairly healthy right now. The program ran a surplus of about $31 million for the recently-completed fiscal year. For fiscal year 2019, the plan is now estimated to run a surplus of about $70 million.

PEIA has been running a surplus and has been building its reserves to the point that it could go two years without a boost of additional state revenue, Director Ted Cheatham told Task Force members on Friday.

But Task Force members have been operating under the assumption that costs for the program will go up $50 million year over year.

Over the course of the task force’s work, officials have operated with a premise that rising healthcare costs will mean needing an additional $50 million year upon year for PEIA.

That number is achieved by rounding PEIA off to a billion-dollar annual program with estimated 5 percent annual cost increases.

So a big question has been where to find the money. Voluntary participants in a survey for the Task Force pointed toward raising the severance tax on natural gas or legalizing and taxing marijuana.

Justice, during Friday’s interview, agreed that more funding will be necessary to meet future costs.

He said the state’s improving economy will help, saying increased spending would not have been impossible with the shape the state budget was in over the past few years.

If the state economic picture hadn’t improved, he suggested, employees would have had to have paid more than the current 80-20 split on premiums.

“At the end of the rainbow, the way the Task Force is going, you’re going to have to have revenue. You’re going to have to have a revenue source from somewhere, ultimately, at the end of the day, because health care costs are going to continue to rise,” Justice said.

“And if we didn’t have the health of the state — not the physical health — we wouldn’t even be considering this. If we were sitting where we were two years ago, we’d be considering whether to go to 70-30. But today we’re trying to explore curing it forever. The only reason we’re afforded that opportunity is because we’re doing good.”

The possibility of privatization came up briefly, as it sometimes does, during a meeting of a group of Task Force members who are supposed to be figuring out what PEIA should actually cover.

That group includes Greg Burton, who was the chief of West Virginia’s workers compensation office when it went private.

Rob Alsop

Rob Alsop, a vice president with West Virginia University, spoke up to say privatization probably wouldn’t work well under the goals of PEIA.

In an interview after that meeting, Alsop recalled that he was a member of then-Gov. Joe Manchin’s administration when workers compensation was privatized. He said that move made sense because the workers compensation system was inefficient.

“PEIA already pays providers some of the lowest rates out there,” he said. “So my point was, it’s really an apples to oranges comparison.

“A lot of PEIA is already third-party managed by private entities so while it’s not a private plan, it’s essentially a self-insured plan that’s run by private entities.”

Privatizing might actually mean increased costs for PEIA, Alsop warned.

“The assumption on that is, if you would go private you might have more flexibility by you’d likely pay private market rates, which would mean costs would go up,” he said.

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Dale Lee

West Virginia Education Association President Dale Lee, also speaking after Friday’s meeting, warned against privatization proposals.

“Privatization is not the answer to this problem,” Lee said. “Privatization, in general, you see continued increase in premiums and plan design losses as the price goes up and it’s certainly not something we’re interested in seeing.”

Lee urged the governor to let the Task Force continue its work.

“I would hope that he would allow the Task Force to continue with the role that we have and to come up with our suggestions, some recommendations and we certainly would want his input on ideas in solving or fixing PEIA,” Lee said.

“But we’ve put a lot of time and effort into this and are making progress, and I hope we are allowed to continue with that progress toward solutions.”

The Task Force, with its volunteer members, is still gathering information about a variety of aspects of PEIA. Two subcommittees met last week. Their next scheduled meetings are in mid-September.

Justice had hoped for recommendations by mid-October.

There are other significant aspects of the upcoming calendar too.

The teachers who walked out of schools last winter are likely looking toward the Nov. 6 election to determine whether enough progress has been made on PEIA. Their decisions at ballot boxes may weigh heavily on these issues.

And each November, the separate PEIA Finance Board begins to consider plans for the next fiscal year, taking proposals out for public comment. Recommendations from the Task Force could provide helpful guidance.

Justice remains patient, but he hopes the Task Force will have recommendations soon.

“Sure there’s concern. It’s a complex problem. I mean, it is a gigantic problem,” he said. “And everybody needs to know there are really qualified people who are working through the Task Force and trying to come up with solutions.”

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