FISCAL NOTE

Date Requested: February 18, 2022
Time Requested: 03:04 PM
Agency: Public Employees Insurance Agency (PEIA)
CBD Number: Version: Bill Number: Resolution Number:
2861 Introduced SB677
CBD Subject: Taxation


FUND(S):

PEIA Basic Insurance Fund

Sources of Revenue:

Special Fund

Legislation creates:

Increases Revenue From Existing Sources, 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 increase the soda tax to five cents, transfer this tax into a fund to supplement current PEIA reimbursement rates up to the Medicare rate for WV inpatient claims, and require annual reports on the effectiveness of the fund. These changes would become effective July 1, 2022. PEIA would incur a minimum of $31 million in additional annual claims expense if it were to reimburse WV Hospital inpatient services at 100% of Medicare. Upon consulting with the Tax Department, PEIA has determined that the proposed raise in tax rates would generate roughly $48 million in additional tax per full year and would redirect nearly $14 million in funds currently going to the WVU Medical School to PEIA for a total of roughly $62 million in supplemental reserves. At this time there are multiple pending bills that could alter PEIA’s requirements to reimburse WV hospital inpatient services at 100% or more of the Medicare rate. Each proposed bill has alternative implementation dates that could result in premium increases or benefit reductions to the plan in the future. The creation of this supplemental reserve fund would alleviate the immediate need for premium increases or benefit reductions to fund the higher reimbursement levels to hospitals for most of the bills pending. PEIA notes that the rising cost of healthcare would require more use of the supplement over time.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2022
Increase/Decrease
(use"-")
2023
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 31,000,000 0
Personal Services 0 0 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 62,000,000 0


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


PEIA consulted with the tax department on Tax Revenue increases. PEIA consulted for the 100% of Medicare reimbursement cost estimate.



Memorandum


PEIA notes that the rising cost of healthcare would require more use of the supplement over time.



    Person submitting Fiscal Note: April Taylor
    Email Address: april.a.taylor@wv.gov