Despite a likely pending spike in coronavirus claims and the collapse of the stock market, the West Virginia Public Employees Insurance Agency remains in good financial health, members of the PEIA Finance Board were advised Thursday.
PEIA financial officers are projecting a spike in costs for COVID-19 testing and medical care for PEIA insurees likely will be offset by a drop-off in elective procedures during the pandemic.
“We will see spiked utilization of services with the pandemic, but we also will see a decline in elective services,” Jason Haught, PEIA’s chief financial officer, told the board.
“Not only do we think members are going to stay away from health care providers for elective procedures, some facilities are completely disallowing elective procedures.”
Meanwhile, through January, PEIA was on track to finish the 2019-20 budget year with a $264.5 million balance, as medical and pharmaceutical claims have come in below estimates so far, Haught said.
The PEIA balance also estimates growth in interest income from $5 million on June 30, 2019, to $11.9 million this June 30, a goal Haught said could still be achieved because PEIA investments are almost entirely in bonds, which have experienced growth during the stock market decline.
However, he said that likely will not be the case for the PEIA Retiree Health Benefit Trust Fund, which, through January, was on course for $34.6 million of growth in interest income. That’s because the $1.2 billion trust fund is heavily invested in stocks.
“This is basically money we won’t need for many years,” Haught said of the investments. “We’ve just got to roll with it at this point, until markets stabilize after the pandemic.”
Also Thursday, PEIA counsel Bill Hicks said four health care bills that will affect PEIA passed the Legislature during the 2020 regular session, including two that have fiscal implications.
That includes legislation setting a maximum $100 co-pay for 30-day supplies of insulin, a move that will cost PEIA about $900,000 a year in lost rebates from drug manufacturers (House Bill 4543).
Another requires health insurers to treat mental health, substance abuse treatment and behavioral health claims the same as medical/surgical claims, which will increase costs to PEIA by about $825,000 a year (Senate Bill 291).
The other measures, providing for 12-month refills for contraceptives (House Bill 4198) and to provide coverage for telemedicine services (House Bill 4003), should have nominal financial impact, he said.
PEIA Executive Director Ted Cheatham noted that costs of the new benefits are not built into the 2020-21 plan-year budget approved by the Finance Board in December and will have to be back-filled.
“Any of these additional costs are not included in the base budget you approved,” he told the board.
The meeting took place via teleconference call.