Bill submitted to protect Northern Virginia’s reinsurance program
Bill submitted to protect Northern Virginia’s reinsurance program | Insurance Business Australia
Reinsurance
Bill submitted to protect Northern Virginia’s reinsurance program
Urgency to solidify the initiative comes amid budget disagreements
Reinsurance
By
Kenneth Araullo
The Commonwealth Health Reinsurance Program, a state initiative in Northern Virginia, is under legislative scrutiny to ensure its continuity.
The initiative has been instrumental in reducing health insurance premiums on the state’s marketplace by 15%. According to a report from VPM, this latest move comes in response to a legislative hiccup that nearly saw the program suspended for the year 2024 due to budgetary stalemates within the state legislature.
The program operates by providing reinsurance to insurers, offering them partial reimbursements for high-cost claims. This mechanism allows insurance providers on Virginia’s health exchange to lower premiums for consumers.
The State Corporation Commission (SCC), tasked with the program’s operational parameters, requires guidance from the General Assembly to establish cost reduction targets.
The urgency to solidify the program’s future was triggered last year when disagreements over the state budget update put the program at risk of suspension in its second operational year. The fiscal impasse meant that, without legislative action, Virginians purchasing insurance through the state exchange were facing a 20% hike in their 2024 premiums, translating to an average increase of about $95 per month.
Initiative to stabilize the insurance market for Virginians
Prompted by the potential suspension, Delegate Mark Sickles of Fairfax introduced a bill aimed at averting future disruptions by allowing the SCC to default to the previous year’s target reduction if the General Assembly fails to set a new target. This bill, supported by the Virginia Association of Health Plans, seeks to stabilize the insurance market and prevent the loss of coverage for many Virginians.
The bill’s necessity was underscored by comments from industry representatives and SCC advisors, emphasizing the detrimental impact that suspending the program would have had on the market and the importance of legislative clarity for its continuation.
Funding for the reinsurance program primarily comes from federal “pass-through” funding, which is allocated based on the savings generated from lower tax credits for low-income Virginians. The state’s contribution to the program is minor in comparison, with a significant portion of the cost being offset by federal funds. For 2023, the program facilitated a $330 million saving for the federal government, which was redirected to Virginia to reimburse insurers, while the state’s contribution was just under $45 million.
The program’s expenses are anticipated to rise in 2024, with the state’s share projected to increase to $67 million, largely due to an expected uptick in marketplace participation. This increase in enrollment is attributed to factors such as the unwinding of Medicaid and other market dynamics.
The proposed budget by Governor Glenn Youngkin, which includes the state’s projected contributions for 2023 and 2024, awaits approval from the General Assembly.
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