Virginia’s state budget bottleneck is casting a shadow on a new state program that this year resulted in a 19.5 percent reduction in the cost people pay for health insurance.
As a result, that could mean a steep increase in premium rates if the House of Delegates and state Senate can’t figure out how to fix their $1 billion differences over budget.
The program uses state funds and a larger amount of matching federal grants to basically manage a reinsurance program, a support plan that covers the cost of health insurers’ increased claims.
Such reinsurance allows insurers to reduce premium rates to reflect the benefit of such support. For 2023, the reinsurance program has reduced premiums by that 19.5%, the State Corporation Commission’s Bureau of Insurance said in response to questions from the Richmond Times-Dispatch.
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But to offer reinsurance next year, the withdrawal from the state’s Commonwealth Health Reinsurance Program Special Fund would need to increase $10 million from what it originally planned for in fiscal 2024, to $38.9 million, the documents show. budget.
And to get needed federal money, the federal government requires a pledge that the necessary state funds are in place.
That sum would be $216 million if the reinsurance program were to produce a 15% savings on individual premiums and $293 million for a 20% reduction, according to a financial analysis by the General Assembly when it cleared the program in 2021.
Due to uncertainty regarding the level of state funding that will be made available and, therefore, the amount of premium reduction that the SCC would require from health insurers for benefit year 2024, a reduction in the zero percent premium from the CHRP for the 2024 benefit year established, the SCC said.
Health insurers would no longer apply the 2024 plan year rate reduction that they applied in 2023, because the CHRP would not reimburse issuers for any claims incurred in 2024. Therefore, the CHRP will not take action to reduce rates in 2024, it said. added.
This is because the premiums charged by insurers should be sufficient to cover the higher bills the reinsurance program now handles.
The law that instituted the program says the SCC must calculate and disclose the amount of money needed for the program by May 1, but without a budget it cannot do so.
But this is a self-imposed deadline, the SCC said.
Federal administrators have not indicated that Virginia’s failure to meet this self-imposed deadline would affect the state’s ability to withdraw federal funds for next year, the SCC said.
If a budget deal exists and it targets the Commonwealth Health Reinsurance Program and federal officials are satisfied, insurers, in the meantime, could adjust their rate submissions to reflect the CHRP premium reduction through July 14, 2023 under the regulation. ‘current timing of submission of tariffs, the SCC said.
The House of Delegates approved a budget that includes $1 billion in tax cuts proposed by Gov. Glenn Youngkin. The state Senate budget uses that money to increase state support for education.
Dave Ress (804) 649-6948
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