LOOKING FOR A SOLUTION – AFT-WV President Kristie Skidmore and WVEA President Dale Lee said Wednesday during a press conference at the Culture Center that the Legislature and Gov. Patrick Morrisey need to propose a long-term fix to PEIA. -- Steven Allen Adams

CHARLESTON — Health insurance coverage for West Virginia’s public employees is stable for now due to approved premium and out-of-pocket expenses beginning in plan year 2026, but costs of the program are expected to keep increasing, with lawmakers searching for solutions.

Representatives of public employee unions held a press conference Wednesday afternoon at the Culture Center, across from the State Capitol Building where lawmakers are engaged in the 2025 legislative session. They were joined by nearly 200 delegates to the annual West Virginia AFL-CIO legislative conference.

“It’s clear that making PEIA as best as it possibly can be and keeping it in that realm moving forward has not been a priority,” said Josh Sword, president of the West Virginia AFL-CIO. “We need for decision makers to make funding PEIA a priority so it’s stabilized moving forward.”

The finance board of the Public Employees Insurance Agency approved premium increases at the end of last year for state employees beginning July 1, 2026, of 14%, a 16% increase for local government employees participating in the plan, and a 12% increase for retirees – an increase of approximately $113 million.

“Our retirees are also facing increases with their PEIA fees and charges,” said Kristie Skidmore, president of the West Virginia Chapter of the American Federation of Teachers. “We depend on our retirees as substitutes in our classrooms on a daily basis. So, we need some work to be done to help them out as well.”

The PEIA Finance Board also approved an increase of 40% in out-of-pocket maximums for state and local government employees, as well as increases in co-pays. The monthly spousal surcharge approved a few years ago by the Legislature will double, from $147 to $350. Administration fees for state and local fund employers will also increase by $2.50.

AFT-WV led a petition effort over the last several months urging the Legislature to fix PEIA. The union collected more than 7,000 signatures, with all 55 county boards of education supporting the petition effort.

“A well-funded and sustainable PEIA is essential for attracting and retaining qualified educators and school personnel, ensuring that West Virginia’s children receive the highest quality education possible,” Skidmore said, reading an excerpt from the petition.

Joe White, executive director of the West Virginia School Service Personnel Association, said that the percent of premium increase for a Harrison County school employee with 28 years of experience earning between $38,101 to $44,100 annually saw an increase of $8,152 in total employee costs from PEIA premium increases between fiscal year 2023 and fiscal year 2026 – a 190% increase in premiums over four years.

“We’re asking that the Legislature do what the Legislature said they would do and what they’re obligated to do in stabilizing PEIA for the public employees in the state of West Virginia,” White said. “Folks, PEIA is a benefit. It was promised to the public employees in the State of West Virginia.”

The steep increases in premiums, out-of-pocket expenses, and other fees are due in part to the annual increase in health care costs facing both public and private health insurance plans. But in West Virginia, much of the increase has come from a freeze put in place by former governor Jim Justice beginning in 2018.

That freeze was lifted with the passage of Senate Bill 268 in 2023, which returned PEIA to an 80/20 employer-employee match for state employees, with the employee/employer match going to 70/30 for out-of-state medical care for non-contiguous out-of-state counties. Among other reforms, SB 268 set the reimbursement rate for all health care providers at a minimum level of 110% of what Medicare reimburses providers.

“Another major driver of West Virginia’s budgetary challenges is the Public Employees Insurance Agency. This is a problem that, quite frankly, has been kicked down the road. And now we must deal with it,” said Gov. Patrick Morrisey during his State of the State address on Feb. 12.

Morrisey presented lawmakers his bill for a balanced general revenue budget with a revenue estimate of $5.323 billion for fiscal year 2026 beginning in July, representing a 1.1% increase from the general revenue estimate for the current fiscal year of $5.264 billion, or an increase of $58.6 million.

Morrisey’s fiscal year 2026 budget fully funds programs, including PEIA for the first time in state history without needing to tap reserve funds. Lawmakers had to approve a supplemental appropriation of $87 million for PEIA reserve fund during an October special session last year.

“My budget grows PEIA by about $45 million this year so that the state can meet its legal obligations,” Morrisey said. “Yet that new state commitment doesn’t even address the 14.4% employee premium increase expected this year. This is one of the many problems that we have inherited.”

During his State of the State address, Morrisey asked the Legislature to work with him to develop short and long-term solutions for PEIA and to find ways to help public employee retirees. PEIA covers approximately 13% of West Virginians.

The House Appropriations and Banking/Insurance subcommittees of the House Finance Committee held a budget briefing Wednesday morning with Jason Haught, the chief financial officer and acting executive director of PEIA. Haught told subcommittee members that rising health care costs, particularly in the pharmaceutical sector and anticipated increases in Medicare Advantage rates, are forcing the plan to make difficult decisions regarding premiums, deductibles, and benefits.

“It is an unfortunate reality that health care costs are increasing,” Haught said. “The manner in which we fund those health care costs must change with them to maintain a viable plan for the folks that need it…The deductible and out-of-pocket changes, they are large but unfortunately necessary.”

According to PEIA reports, total prescription net plan costs were $256.5 million in fiscal year 2024 between July 2023 and June 2024, a 16.6% increase from $220.1 million in fiscal year 2023. The cost is expected to increase for fiscal year 2026.

“The (pharmaceutical) manufacturers get to set the list price at whatever amount they want, and there’s no regulation on that list pricing,” Haught said. “I think that has produced some unsustainable cost trends to the health care marketplace.”

PEIA offered proposals to help curb costs during a legislative interim meeting last November. One proposal called for putting limits on “gold card” prescribers, meaning doctors who are allowed to approve prescriptions for PEIA patients without prior authorization. Another would be to change what health care entities can be reimbursed at the minimum level of 110% of what Medicare reimburses providers to only hospitals.

Another idea is to open up the non-public pool to additional county and city public employees with guardrails. A moratorium was put in place in 2021 on allowing additional local governments to participate in PEIA. But allowing additional city and county governments would expand the pool of participants and allow PEIA officials to negotiate lower prescription drug prices. PEIA has more than 155,000 total active members and 56,000 retirees, down by between 10,000 and 15,000 members over the last several plan years.

Dale Lee, president of the West Virginia Education Association, was a member of the 2019 Public Employees Insurance Agency Task Force formed by Justice. One of the ideas talked about by the task force was a flexible 80/20 plan, with the state paying no less than 80% and the employees paying no more than 20%. Lee said the flexible 80/20 plan would allow the state the ability to help lessen future premium increases.

“Had we had that language in 2019 when we suggested it in the years that we had these tax revenue surpluses, the state could have put additional money in that would have kept the costs low,” Lee said. “The other important part of that: it gives the finance board some flexibility. Currently, under the hard fast 80/20 rule, when money is put into PEIA, then they have no choice but to increase the premiums.”

Fifteen days into the 60-day legislative session, there have been eight bills introduced dealing with PEIA. None of these bills have been taken up by a committee or a subcommittee.

Some of these include: Senate Bill 40, dissolving PEIA and converting it to employer-owned mutual insurance company; House Bill 2623, abolishing PEIA and establishing contract health care for state employees; House Bill 2965, redirecting payments to PEIA to employees in the form of a health savings account; and House Bill 2968, dissolving PEIA as a public health care entity and allowing it to operate as a private health care insurance company.

Public employee union representatives were clear: they did not support dissolving PEIA, privatizing PEIA, or providing a monthly health savings account benefit.

“Folks, that’s not the answer,” said Elaine Harris, a representative for the Communications Workers of America District 2-13 which represents correctional employees in West Virginia. “There needs to be work done to stabilize the plan. Those of us that have negotiated contracts in the private sector, we can tell you that privatizing is not the answer.”

“If privatization is simply handing PEIA over to a for-profit conglomerate organization that’s going to make a profit on it? It’s going to be bad for PEIA plan participants. It’s that simple,” Sword said.

“Any of the options that are presently there now is not a workable option,” White said. “By abolishing it, that kind of gets rid of a responsibility on them…That benefit is a responsibility, and that responsibility is for the Legislature and the governor – together in the budget – to provide the money that it takes to put into PEIA so the employees of West Virginia can have insurance.”