FISCAL NOTE
FUND(S):
2180
Sources of Revenue:
Special Fund
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to credit increases in copays, coinsurance, deductibles and out-of-pocket maximums adopted by the Public Employees Insurance Agency Finance Board to the twenty percent aggregate employee premium payment for insurance.
Copay, coinsurance, deductibles and out-of-pocket maximums have traditionally been used by health insurers to help contain the cost of medical service delivery by reducing the overall cost to the Plan of the services received and to be used as a tool to steer utilization that would be advantageous to the Plan. Because the employee out-of-pocket costs have been in the past separate from the medical and pharmaceutical claims costs in the Financel Plan they were not factored into the 80/20 PEIA premium cost share required by WV law. Should this bill become law any furhter benefit chnages that result in an increase in the employee out-of-pocket costs would be rolled int the aggregate Plan costs and maintaining the solvency of the PEIA Plan. Historically, the employee out-of-pocket Plan cost share on claims was 21%. The change purposed in this bill would alter that and effectively reduce the employee cost share from its present level to about 18% by FY 2013. The difference resulting from this reduction on the employee would have to be offset by the employer.
Since this bill does not seem to touch the status quo and will only impact the PEIA Plan in the event there are increases in the employee out-of-pocket cost after July 1, 2011, the development of this fiscal note was difficult. At present there is no firm expectation of changing the employee out-of-pocket costs so there is no way to adequately anticipate how much impact will be seen to the employer share in dollars.
The PEIA Board Actuary, CCRC Actuaries, purposed an example of what could be expected if we compare a small increase to copays, coinsurance, deductibles and maximum out-of-pocket using this bill's required methodology against the existing formula.
The three years used will begin on July 1, 2011, and end on June 30, 2014. All additional cost would be those of the employer (State)
Plan Year Employee Share Increase to Employer
FY2010 20% (no change, bill not effective)
FY2011 19% $ 2,450,005.00
FY2012 19% $ 5,839,848.00
FY2013 18% $ 7,736,030.00
Total $ 16,025,883.00
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2009
Increase/Decrease
(use"-") |
2010
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
7,736,030 |
| 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 |
0 |
7,736,030 |
Explanation of above estimates (including long-range effect):
As was stated earlier, employe out-of-pocket costs have traditionally been used to steer utilization and contain rising claims costs. It is unclear whether this bill, by making the employee total Plan cost share be reduced with each benefit change, if the ability to steer ulitization would not be reduced.
Memorandum
Person submitting Fiscal Note: J. Michael Adkins, Deputy Director
Email Address: michael.adkins@wv.gov