FISCAL NOTE

Date Requested: January 21, 2020
Time Requested: 01:12 PM
Agency: Public Employees Insurance Agency (PEIA)
CBD Number: Version: Bill Number: Resolution Number:
2526 Introduced SB559
CBD Subject: Insurance


FUND(S):

PEIA Basic Insurance

Sources of Revenue:

Special Fund

Legislation creates:

Increases Existing Expenses



Fiscal Note Summary


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


The purpose of this bill is to authorize small employers to buy-in to PEIA. The fiscal impact of this bill would be contingent upon the way the risk of the new small employers’ employees would be underwritten. Assuming the small employers would be underwritten in a separate risk pool with premiums sufficient to create a reserve to offset unforeseen losses, the cost would be restricted to an increase in administrative costs only. If the small employers were included in the existing non-State Agency risk pool, there would be additional administrative costs and the potential for higher costs to the Non-State agencies. This could occur if the new employers’ employees are of a higher risk, or less healthy, than the current risk of the pool. Having no knowledge of the risk of this population, a reasonable estimate cannot be determined. Per the WV Small Business Economic Profile of the Small Business Administration, there were 23,000 employees for firms with 1 to 19 employees. Assuming 80% of these employers choose to join PEIA, two additional employees would be necessary at PEIA with an estimated annual cost of $80,000. Another potential issue would be the impact on healthcare providers in WV. With the allowance of small employers participating in PEIA, WV providers would have a larger population of patients reimbursed at lower than private health insurer reimbursement rates. PEIA reimbursement rates average approximately 45% less than private health insurance providers. Allowing private employers to participate in government funded insurance plans could jeopardize the current provision of discounts to government health insurers in WV.



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 80,000 80,000
Personal Services 0 80,000 80,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


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


Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.



Memorandum


The fiscal impact of this bill would be contingent upon the way the risk of the new small employers’ employees would be underwritten. If the small employers were included in the existing non-State Agency risk pool, there would be additional administrative costs and the potential for higher costs to the Non-State agencies. This could occur if the new employers’ employees are of a higher risk, or less healthy, than the current risk of the pool. Having no knowledge of the risk of this population, a reasonable estimate cannot be determined. Another potential issue would be the impact on healthcare providers in WV. With the allowance of small employers participating in PEIA, WV providers would have a larger population of patients reimbursed at lower than private health insurer reimbursement rates. PEIA reimbursement rates average approximately 45% less than private health insurance providers. Allowing private employers to participate in government funded insurance plans could jeopardize the current provision of discounts to government health insurers in WV.



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