State employees have enjoyed two straight years with no increases in their Public Employees Insurance Agency health premiums - but a steep jump in medical claims this year will likely force PEIA to propose rate hikes this fall.

"It's likely to be an ugly fall - it really is," Perry Bryant, PEIA Finance Board member and executive director of West Virginians for Affordable Health Care, said Monday.

Claims paid by PEIA for the recently ended 2007-08 budget year jumped more than $35 million, to $454.4 million.

While PEIA bucked national trends and saw prescription drug costs drop more than $6 million to $116.3 million - thanks to aggressive efforts to promote use of low-cost generic drugs - other medical claims jumped significantly.

Inpatient hospital costs jumped 20 percent, to $77.3 million, while outpatient services went up 18 percent, to $97.89 million.

Bryant said it appears more PEIA insurees are going to other states for hospital care.

Out-of-state hospitalizations are more costly, he said, because PEIA does not have the buying power to negotiate discount rates with those hospitals, and because those hospitalizations frequently involve costly specialty care.

"In a state with so many borders, a lot of people of going out-of-state for convenience, and many are also going for very high-end procedures," Bryant said. "It's a tough, tough issue in terms of access to medical care."

State employees have enjoyed two straight years with no increases in their Public Employees Insurance Agency health premiums - but a steep jump in medical claims this year will likely force PEIA to propose rate hikes this fall.

"It's likely to be an ugly fall - it really is," Perry Bryant, PEIA Finance Board member and executive director of West Virginians for Affordable Health Care, said Monday.

Claims paid by PEIA for the recently ended 2007-08 budget year jumped more than $35 million, to $454.4 million.

While PEIA bucked national trends and saw prescription drug costs drop more than $6 million to $116.3 million - thanks to aggressive efforts to promote use of low-cost generic drugs - other medical claims jumped significantly.

Inpatient hospital costs jumped 20 percent, to $77.3 million, while outpatient services went up 18 percent, to $97.89 million.

Bryant said it appears more PEIA insurees are going to other states for hospital care.

Out-of-state hospitalizations are more costly, he said, because PEIA does not have the buying power to negotiate discount rates with those hospitals, and because those hospitalizations frequently involve costly specialty care.

"In a state with so many borders, a lot of people of going out-of-state for convenience, and many are also going for very high-end procedures," Bryant said. "It's a tough, tough issue in terms of access to medical care."

While the overall 8 percent increase in PEIA costs is all but certain to translate into premium increases that the Finance Board will approve this December, Bryant said it is important that state employees not carry the full burden of the increases.

"We have a dysfunctional health care system - to go back to employees and say, we want you to contribute more to this system ... is a pretty hard sell," he said. "I think state employees have a right to expect the state to come up with additional resources."

Ultimately, the agency needs to come up with a system that puts an emphasis on primary care and preventive medicine, Bryant said.

"My preference would be to think about a system re-design that makes the system more efficient and effective," he said.

Under state law, the PEIA Finance Board will have to come up with a tentative plan for PEIA coverage and premiums for the 2009-10 budget year in October.

That plan will then be the topic of a series of public hearings around the state in November. Final approval of the new plan and premiums would come in December - giving state agencies time to adjust their budgets before the new plan goes into effect next July 1.

PEIA executive director Ted Cheatham and other officials were not available for comment Monday.

Reach Phil Kabler at ph...@wvgazette.com or 348-1220.