|Date Requested:January 13, 2011
Time Requested:04:38 PM
| FUND(S) |
Sources of Revenue
Legislation creates:A New Program
Effect this measure will have on costs and revenues of state government.
| The purpose of this bill is to authorize insurance to married workers without children at reduced rates under the West Virginia Public Employees Insurance Act.
The premise for this bill is the belief that two adults married without children should not be paying a family coverage health insurance premium at the same rate as a family with children. When looking at insurance rate setting without claim experience data there could well be a presumption that two married adults without children on their policy would be cheaper than a family with children. However, a review of the actuarial experience of these two groups does not support this reasoning.
The WV Public Employees Insurance Agency has had its contracted actuary group examine this issue in the past and it was found that reality is exactly the opposite of the presumptive basis for this bill. Based on the actuarial data we know that Member and Spouse coverage has cost 15% more than Family coverage. A significant number of the married couples without children in PEIA are relatively older couples whose children have reached adulthood and have left home. Being on average older than couples with children, these two-member family units have a higher health care utilization.
PEIA’s present family premium rate is based upon a blending of the experience of both the married couples with and without children. If PEIA were to adjust premium to reflect underlying risks then the married couples without children group would see a higher premium rate while the family with children premium rate would decrease.
There would be no additional cost to the PEIA should this bill be passed but the premium rate structure using the experience data that is presently employed by the PEIA would be dramatically affected. Premium rate shifting would cause other coverage groups to have their rates adjusted to subsidize the married couples without children.
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3. Explanation of above estimates (including long-range effect):