It comes as no surprise that PEIA, like many state agencies, is feeling the pinch of budget cuts. According to an October 23, 2015, letter to the West Virginia Legislature, PEIA estimates a projected $120 million budget shortfall for the next plan year. The letter attributes the shortfall to several primary factors including escalating health care costs an increased plan population, and an absence of additional funding since 2011.
I have never paid much attention to the PEIA insurance scheme because although my husband is a state employee (with PEIA insurance), my daughter and I are on my employer’s health insurance. My employer, Warner Law Offices, is one of those increasingly rare employers that covers 100% of the health insurance premium for its employees. However, the proposed changes to the PEIA premium structure suddenly made the issue of my husband’s health insurance very personal to me.
Here, Honey, Read This
My husband sent me an email with a link to the November 2013 Public Hearing Presentation, available via PEIA’s website here (PDF file). I could not imagine what was so alarming about this presentation (and health insurance generally) that he would suggest I take the time to review it in the middle of the workday.
Health Insurance Premiums Based on Both Our Salaries?
First, let me say that upon reviewing the document I was genuinely shocked to learn that my husband’s health insurance premium is currently determined not by his overall health, or even by his health history, but is based upon his salary! Incidentally, not only is his premium set by his salary, but his deductible and his out-of-pocket maximum are based upon his salary as well.
What legitimate correlation a person’s salary could possibly have to the risk incurred by an insurer in providing health insurance benefits is completely beyond me. I dare say the answer is, very little to absolutely none. How could this possibly be an efficient way to assess and manage risk?
Apparently, this has been the pricing scheme for some time now, and it is perfectly normal as far as my husband was concerned. I, on the other hand, could not believe that it would be legal to charge people varying prices for the same service based solely upon their ability to pay. I was even more surprised to learn that not only is it not illegal, but it is creeping, at least conceptually, into our economy in more and more areas at an alarming rate. Certainly a topic for another day.
I was aware that my car insurance carrier has been checking my credit score for years now, but that is just to check my financial health and supposed corresponding propensity to file (or not file) a fraudulent claim. Right? Actually, I believe the party line is that my credit-based insurance score looks at my credit history to determine how likely I am to manage my risk exposure. Additionally, an insurance company can only use my credit-based insurance score as one factor in its underwriting process. To my knowledge, my car insurance company is not using my credit score to set my premium based upon my perceived ability to pay.
PEIA, on the other hand, is proposing not only to review my husband’s ability to pay, but will also seek income information from me, a non-insured, and use that information to set my husband’s insurance premium.
PEIA Takes Page From Obamacare Playbook
PEIA is apparently taking a page from the Affordable Care Act, a.k.a. Obamacare, in pricing its health insurance. Once only based on my husband’s salary (still a very socialist scheme if you ask me), now my husband’s health insurance premium, deductible and out-of-pocket maximum will be based on our combined family income.
Using the proposed structure, the cost of my husband’s health insurance will increase by more than 60%. Of course, that would absolutely suck for our household and would amount to a significant decrease in pay for my husband.
However, what I found much more interesting than the fact that our household (as a middle-class family) was being targeted to take yet another hit, was the effect this proposed pricing structure will have on both the lowest and the highest paid state workers.
In the face of a $120 million deficit, not only are the lowest paid state workers slated to experience a minimal ($9.00) reduction in their premiums, but the highest paid state workers will also experience a significant ($42) decrease in their premiums.
This proposed PEIA pricing system then appears perfectly in line with socialist ideology, which inadvertently produces a rich class, a poor class, and no middle class. Call me crazy but this is the type of solution to fiscal problems I would expect to see come out of Washington, not West Virginia.