Executive Summary

Issue Area 1: The Cost of Insurance Plans are not Equitably Apportioned Among Participants.
By law (§5-16-5), the PEIA Finance Board is required to apportion necessary insurance costs equitably among participating employers, employees, retired employees, and providers of health care services. However, the PEIA Finance Board has primarily relied upon employers and providers to pay an inequitable amount of rising plan costs. In addition to employers paying 88% to 93% of the premiums for its active employees which is high compared to the national average, State and local employers also contribute funds for the costs of State and local retirees by paying premiums in excess of the amount necessary for their active employees. Employers' contribution for retirees is between 60% and 70% of the retirees' insurance costs. This employer contribution for retirees is growing three times faster than the growth of employers' total contributions for both retirees and employees, while retirees have gone several years without any changes in their premium payment. However, these costs do not include the cost incurred by providers in the form of contractual allowances that pay providers less than their actual costs. Providers have been used to consume the inflationary medical costs by reducing reimbursement rates. Rather than a proportional increase in retiree and employee premiums in relation to each groups' costs, the Board has depended on providers and employers to absorb medical cost increases.

Issue Area 2: The PEIA Finance Board actively participates in meetings.
The Finance Board meets quarterly and with a quorum as required by law (§5-16-5). The Board has almost perfect attendance for every meeting and have always met with a quorum. The board members take their responsibility seriously and actively represent their interest groups in the development, implementation and approval of financial plans.