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.

This bill would permit qualified volunteer firefighters to be covered by the state's public health insurance plan (PEIA). The bill also adds "volunteer firefigher" to the definition of employee and "volunteer fire company" to the definition of employer and permits the payment of the employer's portion of the costs relating to plan to be paid from funds available to volunteer fire companies. Allowing the access of volunteer firefighters to the WV Public Employee Insurance Agency health and drug insurance plan will not increase any cost diretly to the agency. The cost of premiums will be borne by the volunteer firefighter and in those cases where teh volunteer fire company has sufficient revenues allocated, the volunteer fire company. PEIA may have to perform administrative duties in the establishment of a separate premium table for firefighters based upon the experience of their insurance risk pool, but this is within the normal course of business for the agency. However, due to the complexity of determining coverage eligiblity, entrollmetn, premium paymetn, coverage changes and termination of coverage, the PEIA would recommend that a central organization such as the State Fire Marshall handle the benefit coordination functions of the volunteer fire companies.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2009 Increase/Decrease (use"-")	2010 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	11,000,000	12,100,000	13,310,000
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	11,000,000	12,100,000	13,310,000

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

At the current time PEIA is unable to estimate the actual number of voluntary firefighters who would be eligible to enroll or to accurately estimate the financial impact that would result from this legislation. However, for purposes of this cost estimate the PEIA found that there are approximately 825,000 volunteer firefighters in the United States which would mean that West Virginia would have about 5,000. If the WV firefighers were paying the 20% premium cost share that the active WV government employees are paying then the estimated cost to the State to provide this benefit would be approximately $11,000,000 the first year. Without knowing the medical trends for this potentional risk pool we have trended the medical costs at 10% which would result in a 10% overall cost increase to the State each subsequent year. This would result in a three year cost estimate of $36,410,000.00.

Memorandum

It should be noted that there is a significant potential for adverse selection with passage of this legislation. Adverse selection dictates that only those individual that need or require medical services will be the ones to take advantage of this program. This program would experience higher claim utilization if this occurs that woule result in higher medical claim costs that would drastically skew the claim experience for a relatively smal insured pool. The only recommendation that the PEIA would make on this bill is that the eligibility should be restricted to those volunteer firefighters who have served a certain period of time in service; at least one if not two years of service prior to enrollment. This would reduce the possible adverse selection that may occur by persons volunteering to receive health care coveragte and once their immediate medical needs are satisfied leaving the volunteer fire company or cancelling coverage.

Person submitting Fiscal Note: J. Michael Adkins, Deputy Director
Email Address: michael.adkins@wv.gov