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 authorize insurance to married workers without children at reduced rates under the WV 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 experience data there could well be a presumption that two married adults without children on their policy would cheaper than a family with children. However a review of the actual experience of these two groups does not support this thinking.
PEIA has had its contracted actuary group examine this very issue in the past and it was found that reality is exactly the opposite of the presumptive basis for this bill. A good number of the married couples without children in PEIA are 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 higer health care utlization, including end-of-life care.
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 separate the the two groups and then base the premium on the experience of the indivdual groups the married couple without children group would likely see a higher premium rate while the family with children premium rate would drop.
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 effected. Premium rate shifting would cause other coverage groups to have their rates adjusted to subsidize the married couple without children group.
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 |
0 |
| 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 |
0 |
Explanation of above estimates (including long-range effect):
Memorandum
PEIA is concerned that this bill may set the precedent of the Legislature performing insurance rate setting without having knowledge of the experience data used in setting rates for coverage groups.
Person submitting Fiscal Note: J. Michael Adkins, Deputy Director
Email Address: michael.adkins@wv.gov