FISCAL NOTE
Date Requested: February 12, 2021
Time Requested: 02:24 PM |
| Agency: |
Public Employees Insurance Agency (PEIA) |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2536 |
Introduced |
SB259 |
|
|---|
| 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 30% 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 |
2021
Increase/Decrease
(use"-") |
2022
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
80,000 |
0 |
| Personal Services |
0 |
80,000 |
0 |
| 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):
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.
Memorandum
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.
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 30% 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