FISCAL NOTE

Date Requested: January 16, 2020
Time Requested: 10:23 AM
Agency: Public Employees Insurance Agency (PEIA)
CBD Number: Version: Bill Number: Resolution Number:
1364 Introduced HB4043
CBD Subject: Insurance


FUND(S):

PEIA Basic Insurance

Sources of Revenue:

Special Fund

Legislation creates:

Decreases Existing Revenue, Decreases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The purpose of this bill is to prevent state, county or municipal agencies from covering any portion of PEIA premiums for a spouse. Passage of this bill will create a significant cost shift in premiums from the employer to the employee.
    
    The PEIA ‘State Fund’ employers include county boards of education, state agencies, and colleges and universities. PEIA sets the monthly premium for both the employer and employee in this fund. There are currently 29,700 policyholders in the family coverage tier that include a spouse. The current average cost of a spouse in PEIA is $326 per month. State fund employers will receive a monthly premium savings of $9.7 million. This would shift this premium cost to the employee.
    
    The PEIA ‘Non-State Fund’ employers include county and municipal agencies. Although PEIA sets the total monthly premium for the agency, it doesn’t determine the employee share. Therefore, PEIA cannot verify the savings to this group of employers by disallowance of spousal premium coverage. Assuming 75% of the 6,000 family coverage tier premium differentials are paid by the Non-State Fund employers, a savings of $1.5 million a month would be realized by the employers. Again, this premium cost would shift to the employee.
    
    The result of this premium shift will most likely result in many spouses seeking insurance from other sources such as their employer. With the spouses seeking coverage elsewhere, PEIA would see a decrease in healthcare costs and corresponding decrease in revenue. Assuming 40% of current spouses shift their coverage to another insurer, PEIA would see a monthly savings of $4.5 million and a loss of the same in premium revenue.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2020
Increase/Decrease
(use"-")
2021
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 -54,000,000 -54,000,000
Personal Services 0 0 0
Current Expenses 0 -54,000,000 -54,000,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -54,000,000 -54,000,000


Explanation of above estimates (including long-range effect):


    



Memorandum


    State fund employers will receive a monthly premium savings of $9.7 million.
    Assuming 75% of the 6,000 family coverage tier premium differentials are paid by the Non-State Fund employers, a savings of $1.5 million a month would be realized by these employers.
    
    This premium cost would shift to the employee. The result of this premium shift will most likely result in many spouses seeking insurance from other sources such as their employer. With the spouses seeking coverage elsewhere, PEIA would see a decrease in healthcare costs and corresponding decrease in revenue. Assuming 40% of current spouses shift their coverage to another insurer, PEIA would see a monthly savings of $4.5 million and a loss of the same in premium revenue.
    



    Person submitting Fiscal Note: Jason Haught
    Email Address: jason.a.haught@wv.gov