PEIA plan again includes no premium increases
10/18/2013 - The Charleston Gazette. By Phil Kabler.
CHARLESTON - For a third straight year, state and public school employees covered by the Public Employees Insurance Agency will see no increases in their health insurance premiums.
The PEIA Finance Board gave tentative approval Thursday to a 2014-15 plan with no premium hikes, and only minor changes in two categories of co-pays. The proposal also includes no premium increases for PEIA retiree coverage.
The premium freeze, which will be voted on by Finance Board members in December following a series of public hearings around the state, was made possible by lower-than-projected medical and prescription drug expenses and strong investment earnings in the 2012-13 budget year, PEIA Executive Director Ted Cheatham said.
"Last year was a tremendous year. I've never seen anything like that," Cheatham said Thursday.
For active employees, medical claims costs dropped 2.7 percent and prescription drug expenditures fell 4.2 percent.
That's in sharp contrast to national trends of 4 percent annual increases in medical costs, he noted.
Cheatham said the weak economy may have led insurees to put off elective procedures, or make fewer visits to the doctor.
Also, he noted that in the first week of July 2012, following the massive derecho storm, medical claims dropped $6 million compared to the same week in 2011.
"People didn't go see the doctor. They were worried about other things," he said.
Likewise, Cheatham said an aggressive program to encourage PEIA insurees to use generic equivalents instead of expensive brand-name prescription drugs appears to be working, with generics accounting for more than 80 percent of all PEIA prescriptions filled.
The proposed 2014-15 plan will feature only two minor changes in co-pays, with one intended to encourage PEIA insurees in border counties to use in-state providers.
The plan will add a $25 out-of-state co-pay for insurees who go out-of-state to have CT or MRI scans, dialysis, outpatient surgery, certain endoscopic procedures, or to make durable medical equipment purchases.
Cheatham noted that those procedures are considerably more expensive at out-of-state facilities than the rates PEIA has negotiated with in-state providers.
For instance, PEIA pays in-state providers $427 for a CT scan of the abdomen. The average out-of-state cost for the same scan is $2,726.
Board member Jim Dailey, from Martinsburg, said many Eastern Panhandle residents go to Winchester, Va., for medical care out of habit.
"It's a cultural thing," he said. "They do all their shopping and everything in Winchester."
Cheatham said PEIA will be doing a marketing/outreach program with West Virginia University Hospitals-East in Martinsburg to promote in-state care.
The plan also calls for a $100 co-pay for specialty drugs not on PEIA's preferred list.
Cheatham said specialty drugs are very expensive, and with costs varying greatly. He cited growth hormone, where costs between two brands vary between $2,141 and $3,626 per prescription.
Initial reaction to the premium freeze was positive.
John Thompson, international representative for West Virginia Public Employees Union UE 170, thanked the Finance Board for not proposing any premium increases, "especially in light of the fact public employees have not received any salary increases for a number of years."
Afterward, Cheatham said there may be premium increases on the horizon, as the PEIA reserve fund used to offset premium hikes is projected to fall from $156 million to about $115 million during the 2014-15 plan year, requiring increases to stabilize the fund.
Initial projections call for employee premium increases of 12 percent in 2015-16, and 11 percent in 2016-17. Retiree premiums are projected to increase 3 percent, then 10 percent over the same period.
The plan will go out to public hearing next month, with six hearings scheduled around the state, including Beckley on Nov. 11, Charleston on Nov. 12, and Huntington on Nov. 13.
Following those hearings, the board will meet Dec. 6 for a final vote.