CHARLESTON, W.Va. (WVDN) – The Cardinal Institute for West Virginia Policy released a comprehensive policy brief calling for market-based reforms to address structural issues within the state’s Public Employees Insurance Agency (PEIA), which provides health coverage for more than 200,000 public employees, retirees and dependents.
“PEIA’s financial instability is not merely a line-item concern,” said Jessica Dobrinsky, Cardinal Institute’s Chief of Staff and healthcare policy expert. “It reflects a deeper structural imbalance that compromises both fiscal responsibility and employee well-being. Our analysis points to a clear path forward through market-based reforms that align incentives, empower employees with greater choice and position the state for long-term sustainability in its healthcare commitments.”
The policy brief outlines structural flaws that have repeatedly pushed PEIA into financial crisis, often prompting last-minute interventions by the Legislature. The analysis reveals that PEIA’s current model faces persistent cost growth, limited operational flexibility and mounting taxpayer risk that threatens the system’s long-term viability.
According to the report, a key factor driving costs is a loophole in state code that sets only a minimum reimbursement rate of 110% of Medicare for health care providers, with no maximum limit. This allows providers to bill significantly more—sometimes 150% or higher—without restriction, weakening the state’s ability to negotiate and contain costs.
Key reform recommendations include:
- Increasing cost-sharing and deductibles
- Transitioning to high-deductible health plans paired with Health Savings Accounts
- Introducing reference pricing
- Expanding private insurance competition
The brief argues that, unlike private insurers, PEIA lacks the flexibility to rapidly innovate in response to market trends, leaving the system vulnerable to continued cost growth and political interference. The proposed reforms would shift from the current defined-benefit model to a more sustainable defined-contribution approach, reducing unpredictable taxpayer obligations while expanding employee choice.
“Too often, PEIA’s issues are patched with temporary political fixes,” Dobrinsky said. “Market-based reforms offer sustainable solutions that balance fiscal responsibility with quality care for West Virginia’s dedicated public servants.”
The complete policy brief is available on the Cardinal Institute’s website at: https://cardinalinstitute.com/research/policy-brief-free-market-reforms-for-peia/.
Founded in 2014, the Cardinal Institute for West Virginia Policy, Inc. is a 501c(3) non-profit dedicated to researching, developing, and communicating effective free-market public policies for West Virginia.
