Good year for PEIA may stall premium increases
CHARLESTON, W.Va. -- Lower-than-expected medical and pharmaceutical claims, coupled with a strong return on trust fund investments, has placed the Public Employees Insurance Agency in good financial health -- and in good shape to avoid premium increases in 2014-15, PEIA Executive Director Ted Cheatham said Thursday.
"We're having a really exceptional year at PEIA," said Cheatham. "I don't want to go out on a limb, but I will say it's looking very favorable for [fiscal year] 2015."
Through the end of May, medical claims and prescription drug costs not only came in below projections, but below figures for the same point in the previous budget year.
Medical claims of $325 million were $42.8 million below projections, and $8.6 million below previous year expenses.
Likewise, prescription drug costs of $108 million are $7.6 million below what was budgeted, and $6.9 million below the previous year.
Cheatham hopes that means various wellness initiatives available to PEIA insurees, including programs for weight control, diabetes management, and reversing heart disease, are having a positive effect.
"I'm hopeful some of the wellness initiatives we've undertaken are showing fruition," he said.
He said there's no doubt that investment earnings for PEIA's Retiree Health Benefits Trust grew nearly three times as fast as projections, with more than $57 million of investment earnings through the end of May.
Since July 1, 2012, the fund has grown from $448.8 million to $506.1 million.
PEIA had projected $20 million to $30 million of earnings on investments.
That means PEIA should be able to use surplus from its Premium Stabilization Reserve Fund to offset premium costs for the 2014-15 budget year.
Cheatham said that could mean minimal, if any, changes in premiums for the more than 71,000 public employees insured by PEIA.
"There's a reasonable chance we'll have minimal impact in 2015," he said.
Reach Phil Kabler at email@example.com or 304-348-1220.