This news article originally provided by The Charleston Gazette

December 21, 2006

PEIA plan would cap costs

Protests spur agency to ease burden on retirees

By Phil Kabler
Staff writer

Heeding concerns that a proposed system of high co-payments and deductibles would hit the state’s oldest and sickest retirees the hardest, the Public Employees Insurance Agency Finance Board approved a more equitable plan Wednesday evening.

The plan adopted Wednesday caps out-of-pocket expenses for Medicare retirees at $500 a year.

To cover the cost of the cap, board members cut the proposed reduction in retiree premiums from $70 to $22 a month.

Overall, a relatively healthy retiree would save $64 a year, according to PEIA estimates. For a retiree who requires hospitalization and numerous office visits, the medical care cost increase cannot exceed $236 a year, with the cap.

“We believe we’ve come back with an excellent plan that follows the comments we’ve heard,” PEIA Executive Director Ted Cheatham told the board.

Representatives of public employee, teachers and retiree organizations applauded the change, but raised concerns about the board’s decision to essentially eliminate PEIA as secondary coverage for Medicare retirees.

Instead, the board opted for a new federal funding plan that provides monthly lump-sum payments to the state for Medicare beneficiaries. Projections are that the program will provide an additional $50 million to $60 million of federal funds a year — money the state can use to pay down a projected $8 billion unfunded liability for future health care costs for PEIA retirees.

Judy Hale, with the West Virginia Federation of Teachers, said the state is gambling that the federal government will continue to fund the Medicare Advantage program for the foreseeable future.

“I think it’s a very egregious thing you have done in removing the state’s responsibility as a secondary payer,” she said. “Gambling has truly come to West Virginia when we risk our retirees’ future on Medicare.”

Ernie Terry, with the Coalition of Retired Public Employees, said he is very disturbed that retirees will not have the safety net of PEIA secondary coverage in the event Congress would cut funding for Medicare Advantage.

“To me, it’s like trying to sell somebody a house without a roof, and telling them they’re OK — until it rains,” he said.

Earlier, Finance Board members adopted a motion saying it would be their intent to bring retirees back under PEIA coverage if the Medicare plan funding is cut, but said they did not have the authority to bind future PEIA boards and legislatures by making it an ironclad promise.

Except for changes in retiree benefits, the 2007-08 PEIA plan approved Wednesday has no changes in benefits — and no increases in premiums — for current employees.

Also Wednesday, board member Elaine Harris called on PEIA to do a better job of informing retirees about the coverage changes.

She said there has been considerable misinformation about the shift to the Medicare Advantage plan, including erroneous reports it would force PEIA retirees onto Medicare Part D prescription drug coverage.

Except for an increase in the co-payment for non-formulary brand name drugs from $30 to $50, retirees’ prescription drug benefits will not change under the new plan.

To contact staff writer Phil Kabler, use e-mail or call 348-1220.