Nov. 9, 2011 Discussion of PEIA Planned Massive Take Away of Benefits
This affects WV State Employees, Retirees, many county and municipal workers, school teachers and staff, many university and college professors and staff, state road employees, state police, etc., some other groups with grants, and retirees of all these. [ Counting actives and retirees, it's about 100,000, and dependents, it's not quite 1/10 of population a little less than of West Virginians. ( WV has a presenting of public workers lower than some states).] More than that it is indicative of what is being done to workers in private and public sector in many places.
Draft – Complete loss of drug coverage for many drugs, $500 copays, and copays on medications increases of over 300% & many other copay increases. Also premium increases as much 9% for retirees and over 50% over 4 years. This is just a draft. My comparisons and links. Be sure to see What the teachers have to say about PEIA changes /AFT comments are at end. It explains a lot.
I’ve compared the proposed increases to the present benefits in this email, and shown the percentage of increase. Also a link to the presentation is attached.
http://www.peia.wv.gov/forms-and-downloads/Documents/news_center/Public_Hearing_Presentation_November_2011.pdf
The current plan benefits for actives and PreMedicare retirees are in the Summary Plan Description for Plan Year 2012 Benefits (July 1, 2011 -August 30, 2012
http://www.peia.wv.gov/forms-and-downloads/summary_plan_description/Pages/default.aspx
Shoppers Guides with current premium rates:
http://www.peia.wv.gov/forms-and-downloads/members/Pages/shopper%27s_guide.aspx
Sample Letter to editor: PEIA proposing medication and copay increases with premium increases up to 44% of plan costs : PEIA is looking at 4 prescription options, raising copays in all categories, some over 333% to $212.50 for 3 months, not covering any drugs on their nonpreferred list, not covering any proton pump inhibitors, or not covering any $4 generics. They are planning to raise or add copays on emergency, imaging (xarys) ($50), specialist, PT, OT, and speech therapy, in additional to already existing deductibles and coinsurance. Some copays would raise to $500. For Medicare Advantage retirees they plan a 9% premiums increase, or 400% increase in deductible, a $600 increase in out of pocket cap, and copay increases (some 100% increases). The proposed plan D an all WV plan, will undermine Plan A, as does Plan C. Protect your health care.
But worse, the plan to ignore the 30/70 split, and project raising retiree share to 44% (the next few years), raising premiums about 50% plus other increases for inflation. This when the state recently reported their revenues were ahead of projections, while taking away of compensation for workers, and promised retirement benefits for retirees. No worker or retiree, public or private should have their benefits taken, and those without should gain benefits. Perhaps it’s time for all to contact there representatives at legis.state.wv.us/. Send 34 copies to senate clerk, and 100 to house. Finance, Pension & Retirement, Insurance, Finance, Education, and PEIA (interim) committees and are important. Protect your health care. Public hearing in Charleston at Civic Center at 6:00 on Monday, Nov. 7.
Comparisons: You can submit you comments by mail or e-mail to: peia.help@wv.gov . Be sure to include your contact information They want to add a $500 deductible for knee, and hip surgery/ replacement to “encourage exploring alternatives”. What an insult, I don’t know anyone who had a hip or knee replacement unless it was a last resort, and all wished they hadn’t put it off so long. They could require that your physician indicate alternatives have been considered or tried, and that the surgery is needed without raising deductible to $500. This is especially onerous for the seniors as most of the Advantage Plan is Medicare not PEIA. Retirees get a triple whammy. See below. Is this not a lot just to keep the Advantage insurance company making a big profit? They’re trying to hang on to us in Advantage rather than taking us back to regular Medicare. They want to make profit from our Medicare.
This 42 million in take aways is 420 per plan member. That the same as and $420 pay reduction or pension reduction. Also Plan C has drained funds from Plan A and the pharmacy plan in that the sicker better paid stay in A, and the more healthy better paid go to plan C, but can come back on open enrollment to plan A, when sick. Due to the 20/80 match for every $20,00 the plan C employee saves, the employer saves $80,000. But when richer employees are sick, the stay on plan A or come back. As you know for any plan to work the healthy and the sick need too be in equally, but by setting up Plan / they have undermined Plan A, due to the 20/80 match and sliding scale. (A better way to have done this would have been to leave all in Plan A or B and then if the better paid employees ended up paying more than say 30% of cost of plan, their employers could give reimbursement stipends. That would have left their higher premiums in plan when healthy, not just when sick, and thereby the state/employers would be giving the required 80% match to this. )This is the undermining of the whole plan. How much did they say they would save by doing plan C. Now you know whose paying for this. This has undermined the sliding scale , but more importing the true 80/20 they agreed to. It now becomes a spiraling ever increasing race to the bottoms, as we cede benefits away, due to ever increasing premiums, as the healthy go to high deductible plans, and the sick cling to Plan A. PEIA and the state are not operating I good faith, as this undermines the plan and the amounts they would have had to pay had they left it all plan A and B. The new Plan D they don’t even explain or describe, but it will probably be some device to hasten the demise of Plan A!!!
Note PEIA went to a RESORT to work on these take-aways. See Charleston Gazette for details
Regarding Medications: They’re looking at 4 options, all bad. ACTIVE EMPLOYEES (STATE & NON-STATE), NON-MEDICARE RETIREES, AND “SPECIAL MEDICARE PLAN” BENEFIT OPTIONS: (notice how that’s phrased “Special Medicare” bet this isn’t happening to regular Medicare or all Medicare recipients. We should fight this.)
Pharmacy Option A: Closed Formulary – loss in benefits 24 million
Top 102 Non-Preferred Brand drugs that would not be covered are:
So list in presentation is not all inclusive- many more would not be covered
See partial list in online presentation. But what other drugs are on the list?
How many hundreds of drugs will they pay 0 on? So if you need need any of these medication ever you don’t get a dime of help. Think lesser used, expensive drug. Think cancer and new great treatments, etc. Also since they move medicines into this category at will, you really don’t know what medications will in up here .You will have no coverage for these medications. Many of the suggestions substitutions aren’t the generic equivalents, or do not work the same way. Instead of not covering, they should have step programs, or physicians explanation about why needed over others. Also some drugs are not covered just because others have rebates.
Pharmacy Option B: Increase Copays – loss in benefits 20.5 million
Generic $8 up form $5 a $3 increase - a 60% increase
90-day supply $16 up from $10 a $ 6 increase - a 60% increase
Preferred Brand $50 up from $15 a $ 35 increase per prescription - a 70 % increase
90-day supply $125 up from $30 a $ 95 increase per prescription - a 333 % increase
Non-Preferred Brand $85 up from $50 a $ 35 increase per prescription - a 70% increase
90-day supply $212.50 up from $100 a $ 112.50 increase per prescription - a 112.5 % increase
Specialty – $100 up from $50 a 200 percent increase
Pharmacy Option C: loss in benefits 6 million
Remove Proton-Pump Inhibitor (PPI) Coverage. PEIA didn’t list which drugs these are but common proton pump inhibitors are:
Omeprazole (brand names: Losec, Prilosec, Zegerid, ocid, Lomac, Omepral, Omez)
Lansoprazole (brand names: Prevacid, Zoton, Monolitum, Inhibitol, Levant, Lupizole)
Dexlansoprazole (brand name: Kapidex, Dexilant)
Esomeprazole (brand names: Nexium, Esotrex)
Pantoprazole (brand names: Protonix, Somac, Pantoloc, Pantozol, Zurcal, Zentro, Pan, Controloc)
Rabeprazole (brand names: Zechin, Rabecid, Nzole-D, AcipHex, Pariet, Rabeloc. Dorafem: combination with with domperidone
Revaprazan So we are to throw people with stomach problems under the train. not everyone can take over the counter versions, but need those only available by prescriptions.
Pharmacy Option D: loss in benefits is 4.5 million – No Coverage for $4 Generics (Mostly for prescription of 30 units) Does this mean they won’t have pay on the 90 day rate.
MEDICARE ADVANTAGE AND SPECIAL MEDICARE PLAN RETIREES MEDICAL
BENEFIT OPTIONS:
1. Option A: 9 % Premium Increase.
2. Option B: Benefit Adjustments
1. Deductible $100 up form $25 a 400% increase. Note the $25 increase was a take away of Traditional coordination of benefits and change to “carve out” and PEIA did not even put that in the hearing presentation the year they did this.
2. Medical Out-of-Pocket Maximum $1,350 (includes deductible and copays) up from $750 a 80% increase
3. Adjust Copays
Specialist $30 up form $20, and a 50% increase and double the $5 increase for actives.
Outpatient Services $100 up from $50 a 100% increase
Inpatient Services $150 up from $100 a 50% increase
Plus all the changes to prescriptions - Why all these prescription changes for those on Medicare or retired, with federal Medicare etc. covering more than ever. With regards to people who are on Medicare or re retired the federal government provided a $250 for those who reach th Medicare Part D coverage gap or “doughnut hole” in 2010. As of 2010 it also provides funding to encourage employers who provide health insurance to continue to offer health benefits. As of 2011 it expands coverage for wellness and preventative care under Medicare. It also provides a 50% discount on Part D brand-name drugs and a 7% discount on generic drugs whole in the coverage gap in 2011. It closes the Medicare Part D coverage gap by 2020. All the federal change should reduce costs to PEIA, as it now fills in gaps in what federal Medicare normally covers. (This was all part of national health care reform.) The more you get for your Medicare premium from Medicare, the less PEIA has to cover. Note: For retirees they project about a 50% increase in premiums over the next 4 years, to over 44% of plan rather than the 30/70 split as promised.
ACTIVE EMPLOYEES (STATE & NON-STATE), AND NON-MEDICARE RETIREES
BENEFIT ADJUSTMENTS: Remove Coverage
1. Acupuncture 2. Massage Therapy
Adjust Copays
1.Emergency Room $100 up from $25 as 400% increase. Loss in benefits 2.4 million
2.Urgent Care $25
3. Imaging $50 **** ( is this per xray or per set on one day? Loss in benefits 3.4 million
4. Specialty Physician $25 - up from $20 a 25% increase
5. Physical, Occupational Therapy and Speech Therapy $10 Loss in benefits 1.8 million
And they also have to pay deductibles and coinsurance – usually of 20 %
New $500 Copays (These copays will apply and then these services will be
subject to deductible and coinsurance.)
1. Spine Procedures
2. Knee Replacements
3. Hip Replacements
4. Shoulder Surgery
5. Gastric Bypass
6. Medically Necessary Dental Services
Really, they want a $500 copay on hip and knee replacements. So people will try “alternatives”. Why not just this as a prior approval item, with no increase in copay, if that’s their goal? Just have their physician provide information on “alternatives” that didn’t work, or why alternatives don’t work, & then NOT charge the high copay, if they really just alternatives explored. If one has bone rubbing on bone, there really isn’t an alternative. Most people put off knee/ hip replacement for years, & then say they wish they had done it sooner.
Weird Finances
The 42 million dollar reduction is benefits amounts to a $420 loss per worker or retiree. And as the number of workers, school, state, county, municipal, university, has increased by 1000, some of the increased cost are due to this, and they need to increase funding to cover this. So we are getting even less to compensate for inflation. Who do you thank for these give aways, Tomblin who won’t enough budget funds, and Manchin who wouldn’t either, and got the finance director from an insurance company, one of the richest in the country. UE local 170 pointed out last year, that when state employee process claims they did it cheaper. Republicans are worse, some want to do away with minimum wages. Corporate lobbyist are problem.
On page 15 of PEIA Presentation they’re adding 31 million to reserve next year. But is not the amount going into the reserve from the 30/70 match for retirees ( 20/80 actives)? But that’s the match that’s suppose to cover our medical cost nest year, and they’re diverting it. Is not this reserve suppose to be for the employers liability over 30 years? It should come out of their funds, not next year’s 20/80 (30/70)match. So they having it both ways, the money for the 20/80 -30/70 matches for next year, is not being spent on next year’s health care, but being reserved for future years. They’re putting into reserve for future years, what they failed to set aside. This 31 million is 3/4 of the 42 million they’re cutting in benefits, so they don’t have to cut that 31million
They should let the rainy day fund stand for the reserve. It’s only to guarantee they’re make their payment each year. The state’s not going to cease to exist like a company. Likewise, the 3 years after next year have 31 to 38 million going into the reserve from the match. Lastly they shorted their share on both the 20/80 and 30/70 matches last year, and need to make this up.
Since they’ll never going to spend the reserve, if new hire get back post retirement health care, then it’s just standing good for the employers unfunded liability and shouldn’t come out of our yearly 20/80 and 30/70 match. Why not use part of the state rainy day fund to stand good for the state share of unfunded reserve. Lastly it was just in the paper how much tax revenue is up more than the state expected, and how much the can put in the rainy day fund, so fund PEIA.
The benefit take away is 42 million. So this 31 million is 3/4 of the take away.
What’s more PEIA went to a RESORT to discuss how to reduce our benefits. Who paid for that? Guess.
While benefits are cut, PEIA is budgeting 9% increase in administration costs for this year plus 4 more years. Compounded that’s over a 50% increase. Raises??? (% year. And how much more will insurance contracting companies make. We’re supporting to sets of executives, PEIA and all the contactors. UE Local 170 in 2009 rightly pointed out, that when state employees processed claims it was a lot cheaper. No corporate CEO’s to support. The CEO Coventry, which was over PEIA finance director’s former company and got first PEIA first Medicare Advantage contract, made 23 million in compensation (salary, bonus, and stock options one year).
***** When figuring unfunded liability PEIA put in medical inflation factor, but not all the savings soon to come from health care reform in future years.
State has money but spend it on other extras.
Example. 6 million for decorative lighting at New River Gorge, while cutting medical benefits to state road workers.
40 to 60 to million in tax breaks to one rich coal to gas corporation/ owners in Mingo. Also previously approved was 200 million in give-aways and breaks to out of state Penn/Texas based Consol coal. And they planned to do it 4 times more. /if this occurs, those lost taxes invested at 5% compounded over 30 years ( the length they’re looking at for the liability) it would grow to 4.3 billion!!!!
For this reason everything needs to be audited and reviewed. -Everyone can help. Check state budgets for waste and tax breaks. Check PEIA budget, comprehensive report, expense accounts, etc. Also check expense of all companies with which they contract. This is money for your health care, and it doesn’t need to disappear into corporate CEO profits, and PEIA expense accounts and raises. See PEIA Comprehensive report and OPEB & RHTB reports at http://www.peia.wv.gov/forms-and-downloads/financial_reports/Pages/Other_post-employment_benefits_(OPEB)_and_RHBT.aspx. Looks at state budgets, and news articles. Each person should send tips to unions and retiree groups. Unions and retiree groups should band together to audit all, form a committee of all these groups, and come up with funding suggestions and waste cuts to present to PEIA and the legislature.
The bids and costs need to be checked. 1. Pharmacy Vendor Bid, 2. Wellness Vendor Bid, 3. Medicare Advantage Prescription Drug Program Bid
ACTIVE EMPLOYEES (STATE & NON-STATE), AND NON-MEDICARE RETIREES :
1. No Premium Increase
2. New Plan “D” with 5% Premium Decrease
No other info given- probably another way to total amounts employers pay under 80/20 match which will also undermine Plan A further and leaves a smaller amount available for 30/70 match for retirees too.
3. Benefit Adjustments
How Current Plan C and Proposed Plan, will raise premiums in Plan A, and force eventually force almost all to high deductible WV only plans.
I called and they said this Plan will be a primarily WV only plan. once they get away with this, won’t they keep raising plan A until we’re all prisoners of WV when it comes to medical care. Why didn’t they put anything other than one line about this plan in the handout. Plan D will undermine Plan A, just as plan C did.
Plan C has drained funds from Plan A and the pharmacy plan in that the sicker better paid stay in A, and the more healthy better paid go to plan C, but can come back on open enrollment to plan A, when sick. Due to the 20/80 match for every $20,00 the plan C employee saves, the employer saves $80,000. But when richer employees are sick, the stay on plan A or come back. As you know for any plan to work the healthy and the sick need too be in equally, but by setting up Plan C they have undermined Plan A, due to the 20/80 match and sliding scale. (A better way to have done this would have been to leave all in Plan A or B and then if the better paid employees ended up paying more than say 30% of cost of plan, their employers could give reimbursement stipends. That would have left their higher premiums in plan when healthy, not just when sick, and thereby the state/employers would be giving the required 80% match to this. )This is the undermining of the whole plan. How much did they say they would save by doing plan C. Now you know whose paying for this. This has undermined the sliding scale , but more importing the true 80/20 they agreed to. It now becomes a spiraling ever increasing race to the bottoms, as we cede benefits away, due to ever increasing premiums, as the healthy go to high deductible plans, and the sick cling to Plan A. PEIA and the state are not operating I good faith, as this undermines the plan and the amounts they would have had to pay had they left it all plan A and B. The new Plan D they don’t even explain or describe, but it will probably be some device to hasten the demise of Plan A!!!
Living Wills / Advance Directive pitfalls / Note: They still have increased premiums, unless one signs a living will, and the one they send out is dangerous in that it only requires one physician to say your are terminal or (NOT and) comatose, which they describe as merely unconscious. The font is too small, not the size used in legal wills usually, and too small for many older seniors. PEIA will be able to have this used to override your medical power of attorney appointee if they want a second opinion or specialist. Guess we’re living too long. Be afraid, be very afraid. See peiawatch.wordpress.com for details. See article at peiawatch.wordpress.com Look in list on right for http://mysite.verizon.net/cureltd/id24.html
Also go to http://mysite.verizon.net/cureltd/index.html Citizens United Resisting Euthanasia. See Before You Sign on the Dotted Line – http://mysite.verizon.net/cureltd/id24.html
You can submit comments in writing to: PEIA Finance Board , 601 57th St., SE, Suite 2, Charleston, WV 25304-2345 Or via e-mail to peia.help@wv.gov
What the teachers are saying . Go to wv.aft.org.
http://wv.aft.org/index.cfm?action=article&articleID=be7b6723-770d-4043-a7b0-6e92b873c6b1
Their information about funding very good.
Also go to UE local 170 web site, AFSCME WV site ,and WVEA, and CWA sites and PERSA. Anyone can join PERSA. Retirees can join a union even if they weren’t in on, and the rates are cheap like $12 a year. Non education workers can choose from CWA,UE local 170, and AFSCME. You can usually lobby with them even if not member, and get on e newsletters.
Go to peiawatch.wordpress.com and look at tabs on top for document for ways to help
Also has lists of other ways government wasted money.
The Finance Board will hold public hearings to receive comments on the proposed financial plan for the 2013 plan year. Registration begins at 5 p.m., and the hearings run from 6 to 8 p.m. Customer service will be available from 5 to 6 p.m.
Please make every effort to attend a hearing to voice your concerns over these changes. The document also includes talking points for you to incorporate, if desired, into your remarks if you speak at a PEIA public hearing.
Hearings are scheduled as follows:
Monday, Nov. 7, 2011
Civic Center, Little Theater
200 Civic Center Drive
Charleston, W.Va.
Tuesday, Nov. 8, 2011
Ballroom A
One Tamarack Park
Beckley, W.Va.
Monday, Nov. 14, 2011
Holiday Inn
301 Fox Croft Ave.
Martinsburg, W.Va.
Tuesday, Nov. 15, 2011
Ramada Inn
20 Scott Ave.
Morgantown, W.Va.
Wednesday, Nov. 16, 2011
West Virginia Northern Community College
B&O Auditorium
1704 Market Street
Wheeling, W.Va.
Thursday, Nov. 17, 2011
Marshall University Medical School
Harless Auditorium
1600 Medical Center Drive
Huntington, W.Va.
If you can’t attend a hearing in person, you can submit comments in writing to:
PEIA Finance Board
601 57th St., SE, Suite 2
Charleston, WV 25304-2345
Or via e-mail to: peia.help@wv.gov
——
Plan Year 2013: PEIA Public Hearing Information, Proposed Changes
Overview and 2013 Plan Proposal
• There were no additional state dollars from the Governor for PEIA in plan year 2012, but there was a premium increase for employees that did not participate in the wellness program ($10) and/or complete the living will ($4).
• Governor Tomblin has said he will increase the PEIA budget with state dollars by 4%, or $25 million, for plan year 2013.
• Medical rate of inflation is about 6.5% and Rx inflation is around 10%.
• As a result of no additional money from the Governor/Legislature last year and only a 4% increase this year, PEIA finds itself in a pretty big hole.
• The 80/20 rule prohibits a premium increase in plan year 2013 because of last year’s premium increase with no additional state dollars (It actually threw us out of 80/20 for the year). The difference is made up in plan year 2013 by not increasing employee premiums, which bring us back to 80/20.
Benefit reductions and increased participant costs proposed:
• As a result, the board needs to “eliminate $42 million in benefits”. The proposals can be piecemealed and amended, but the cuts will be substantive.
• The proposals are broken down by what each will save the plan, they are (for actives and retirees pre-65):
o Capping the Pay Go Premium, aka the retiree subsidy, at $162 million with an escalator of $5million per year. In the most recent legislative session, we agreed to a cap, but only if the escalator was a percentage and not a fixed dollar amount; and the subsidy was broken down by a per member per month calculation. The cost to retirees under this proposal is off the charts.
o Close Tier 3 of the Rx formulary, which would change the formulary to look like $5 for Tier 1, $15 for Tier 2, 100% for all other drugs and $50 for specialty drugs. It essentially means no coverage at all for Tier 3 drugs. It would affect 22,000 participants and cost participants about $24 million.
o Increase co-pay in the Rx formulary. Instead of it looking like it does today, which is $5/$15/$50/$50 Sp., it would look like $8/$50/$85/$100 Sp. It would affect everyone and cost participants about $20.5 million.
o Eliminate PPI (proton-pump inhibitor) coverage, which are the gastric acid drugs. Examples of PPIs include Nexium, Prevacid, Prilosec, and Aciphex. According to PEIA’s medical doctor, the over-the-counter medications for PPIs have the same ingredients and make-up as the Rx medications. The cost to participants would be $6 million.
o Open a new West Virginia Only plan. The new plan would only allow participants to use West Virginia providers. It is anticipated this will save the plan about $5.4 million.
o Eliminate coverage for the $4 Wal-Mart drugs. Not sure of the details on this, but the cost for participants is $4.5 million.
o Increase family out-of-pocket max from 1.5x to 2x for single coverage. The cost for participants is $3.8 million.
o Introduce imaging co-pay of $50. The cost is $3.4 million.
o Increase emergency room co-pay from $50 to $100. The cost is $2.4 million.
o Make physical, occupational and speech therapy a medical necessity for coverage, with a $10 co-pay. The cost is $1.8 million.
o The list goes on and on with savings under a million for each proposal. Some examples include introducing $500 co-pays for procedures like Hysterectomy, Knee Replacements, Hip Replacements, Gastric Bypasses, etc.
Recommendations/Talking Points
General
• School employees were given health benefits in lieu of a pay raise several years ago. Each year that premiums, co-pays, and out-of-pocket expenses are increased results in a pay cut for employees.
• In 1988, the employee share of PEIA was ZERO.
• State law mandates that PEIA should have an 80/20 premium split by 2007.
• Employees are paying more money for fewer benefits.
• West Virginia already faces a teacher shortage, particularly in critical need areas such as science, math, and foreign language. It will be difficult to attract and retain quality teachers with salary and benefit packages that are inferior to surrounding states. This will erode the quality of education delivered to WV children.
• The philosophy of these proposals flies in the face of what insurance is all about, which is about all participants sharing costs, not financially penalizing the sick.
• We should continue to strive to find innovative ways to expand the program and/or develop networks in/out of West Virginia to provide relief for active and retiree enrollees within PEIA.
• There is no reason for substantial benefit reductions when there is an excess reserve. At the end of the 2012 fiscal year, the reserve is expected to be at $187 million. The PEIA Finance Board should use more of the excess reserve to offset at least some of the proposed benefit reductions.
• Of course, the traditional public hearing statements apply. Some are:
o The Board shouldn’t balance the state budget on the backs on actives and retirees.
o The Governor should come up with more money to help offset the benefit reductions.
o This is taking back PEIA benefits at its worst.
o These proposals will increase the financial burden on the sickest participants of PEIA.
o It is important to offer the Board solutions. Most speakers complain without offering suggestions. The Board is willing to consider options, provided they are offered.
Specific Issues:
• The first, and possibly most important, issue is the Pay Go Premium. As mentioned earlier, AFT-WV has agreed to a cap, but only if the escalator is a percentage and not a fixed dollar amount, as well as a per member per month calculation. Here is why: In year 1, if the cap is $5 million of $162 million (this is the cost of today’s retiree benefits) that represents a 3% increase. In the following year, the cap is $167 million ($162 plus the $5). If a flat dollar escalator is used, the percentage increase falls below 3%. The difference really starts to show in the out years, let’s use year 10 as example: The cap would be $212 million in year 10 ($162 plus 10 years of $5 million increases). Moving to year 11, a $5 million increase amounts to a 2.3% increase. As you can see, the further along we go, the lower the percentage increase, which amounts to additional costs placed on the backs of retirees. That is why must ask the Board to use a percentage escalator instead of a fixed dollar amount escalator. A supportive statement would be that health care costs are always broken down and based on percentages; the Board should not change the rules midstream in order to penalize retirees. Additionally, we must break down the subsidy to a per member per month calculation. The rationale is simple; each member is entitled to fair subsidy no matter the number of retirees. Here is why: If there are 10,000 retirees in year 1, each retiree would receive an annual subsidy of $16,200. In year 2, without a per member per month adjustment, the retiree number increases to 11,000, which equates to an annual subsidy of $15,180, an amount that is $1,000 less than the previous year. If a per member per month calculation is used, the subsidy is broken down individually and the increase of retirees does not affect the benefit. Ted Cheatham is supportive of this, but we should remind him and the Board that this is the only fair way cap a benefit.
• There is no excuse for substantial benefit reductions when there is an excess reserve. At the end of the 2012 fiscal year, the reserve is expected to be at $187 million, or 25% of the plan. If the reserve is reduced to only 15%, which is still 5% higher than the statute says, that would free up roughly $80 million to offset benefit reductions. Under the proposal, $17 million is removed from the reserve to offset benefit reductions, but it still leaves the reserve at 21% at the end of plan year 2013, which is well above the recommended amount. We should encourage the Board to use more of the excess reserve to offset at least some of the proposed benefit reductions.
• There are 2 big ticket items related to Rx coverage. One benefit change is worth $24 million and the other is worth $20 million. It seems the trend under all of the proposals is that the participants who utilize more of the care should be paying more. This is a slippery slope. On one hand, I think utilizers should pay a little more for the coverage they receive; this is applied now in the form of co-pays. On the other hand, that philosophy flies in the face of what insurance is all about, which is about sharing costs, not penalizing the sick. A major plan change like one of these two options will be detrimental to those requiring 3rd Tier drugs. If changes are made to the formulary, exceptions should be made for cases in which there is no Tier 1 or Tier 2 alternative.
• Offering a West Virginia Only plan may be a viable option for those that live in West Virginia’s “major” cities, but for many plan participants, it would simply not be an option. In fact, the majority of West Virginians live in rural parts of the state within 50 miles of the border. As a result, many folks can’t get the care they need in West Virginia. This new plan would be attractive, at a 5% discount off of the Plan A rate, but it would decrease the pool of Plan A participants, resulting in increased costs for those that remain. Note: PEIA reimburses providers in WV less than 20 cents on the dollar. Conversely, out-of-state providers are reimbursed at 93 cents on the dollar. Hence, the trigger!
