Health insurance sticker shock looms

Sticker shock looms for Virginians who buy their health insurance on a state-run marketplace, especially those with higher incomes who can't afford policies available on the individual insurance market.

Higher premium notices will begin landing in mailboxes next month, unless Congress acts sooner to extend enhanced federal subsidies that make health insurance affordable for most of the 415,000 Virginians who buy coverage on the exchange the State Corporation Commission operates.

Those premium increases could range as high as $739 a month in Henrico County and $834 a month in Roanoke, exchange officials warned this week, which could cause 25% to 30% of those enrolled to drop health insurance entirely.

"We're still very concerned about the impact that this is going to have on Virginia consumers," said Keven Patchett, director of the Virginia Health Benefit Exchange, which runs the marketplace at the SCC.

With congressional midterm elections looming next year, Virginia representatives in Congress face a quandary over whether to extend the enhanced subsidies, first enacted in 2021 in response to the COVID-19 pandemic, and, if so, when.

On Friday, the Republican-controlled House of Representatives voted to pass a stopgap funding bill to avoid a potential federal government shutdown at the end of this month, but did not support Democratic efforts to extend the enhanced benefits, which aren't part of the resolution.

Kiggans' bill

Rep. Jen Kiggans, R-2nd, representing a Hampton Roads swing district that Democrats have targeted in next year's elections, introduced legislation this month that would extend the subsidies for a year — until after the midterm results.

In a statement to the Richmond Times-Dispatch on Friday, Kiggans said, "More than 33,000 people in my district relied on the enhanced premium tax credit last year to keep their coverage, and without action in Congress, they'll soon face unexpected cost increases."

"The COVID pandemic is over, and these pandemic-era tax credits must end, but we need a responsible plan in place to ensure families don't lose access to the care they depend on," she added. "I'm currently working with my congressional colleagues to pass a modified temporary tax credit extension to give us time to develop a longterm solution."

Rep. Rob Wittman, R-1st, an 18-year veteran who represents a district anchored in the Richmond suburbs that Democrats also are targeting next year, recently told the Richmond Times-Dispatch that he favors considering extension of the health insurance subsidies later this year, when Congress would act on a final appropriations bill to fund the government through next September.

Kiggans and Wittman voted Friday to adopt the stopgap funding resolution without extending the subsidies.

Wittman said in a statement to The Times-Dispatch, "I will continue to monitor the developments with the enhanced premium tax credits — which don't expire until the end of the year — and work to ensure Virginians continue to have access to affordable, high-quality health care."

Now, the debate will move to the U.S. Senate. Senate Republicans and Democrats rejected each other's stopgap funding alternative Friday, but the GOP will need Democratic votes to reach the 60-vote threshold required under the chamber's filibuster rules.

Kaine and Warner

"I'm viewing the House proposal as an opening offer," said Sen. Tim Kaine, D-Va., in a press briefing on Thursday.

Kaine and Sen. Mark Warner, D-Va., said they don't favor waiting to address the health insurance issue or, as Kiggans proposes, extending it a year. Congress took a similar approach with cuts to Medicaid to pay for tax cuts in the "One Big Beautiful Bill" that President Donald Trump signed July 4. Those cuts will begin to take effect in 2027, after the elections.

"That is cowardice," Warner said on Thursday. "A year extension, I think, would not be enough."

Kaine said he's "wary" of a one-year extension for the same reason.

"If you say you want to fix it, let's do it right now," he said.

Open enrollment nears

Timing is critical for Virginians who buy insurance on the state exchange under the Affordable Care Act. With open enrollment set to begin Nov. 1, insurers have filed requests at the SCC Bureau of Insurance to increase monthly premiums by an average 20.5% a month if the enhanced tax credits expire on Dec. 31, as scheduled.

The bureau estimates that without the enhanced credit, along with increases in illnesses and hospital and drug costs, the average premium next year would increase by $96.09 a month.

The increases would be significantly higher for Virginians with incomes above 400% of the federal poverty level — $106,600 for a family of three — who would not be eligible to buy policies on the exchange without the enhanced federal credits and would have to buy insurance on the private individual market. They would see premiums rise by as much as $644 to $739 a month in Henrico and even higher in Roanoke and Fairfax County, Patchett and his staff estimated Friday.

Virginia's Obamacare premiums set to jump sharply, SCC reports

Since the enhanced credits took effect in 2021, 42,458 people at that income level enrolled in policies through the exchange, an increase of 419%.

The second-largest boost in enrollment came from Virginians with annual incomes between 100% and 150% of the federal poverty level — $25,820 to $39,975. Since 2021, 45,109 at that income level enrolled in policies on the exchange, an increase of 82%.

If the enhanced subsidies expire, their premiums would not rise as much as those for families in higher income brackets, but would represent a larger share of their income.

For example, a family with an average household income of $20,362 would pay an additional $36 a month, a 133% increase, the exchange estimated.

"The overall dollars would be smaller, but the percentage would be higher," Patchett said.

Three potential increases

The Virginia Health Care Foundation, a non-partisan public-private partnership, outlined three potential premium increases for people in different parts of Richmond if the enhanced tax credits were to expire, using an online tax credit calculator produced by KFF, a nonprofit formerly known as the Kaiser Family Foundation.

A couple in their mid50s living in South Richmond with an income at 150% of the poverty level — $31,725 for a family of two — would pay an additional $111 a month, or $1,329 a year. A 27-year-old living in the Fan District with an income of 250% of the poverty level — $39,125 for a single person — would pay an additional $145 a month, or $1,737 a year, the foundation estimated.

The bite would be deeper for a middle-income family of three — two parents in their early 40s with a 10-year-old child — who live in the near West End and earn at 400% or the poverty level, or just over $106,600. They would pay an additional $242 a month, or $2,907 a year.

"We would anticipate more folks being uninsured, if they're not able to afford the higher premium rates," said Rachel Rees, chief executive officer of the foundation.

KFF has estimated that more than 350,000 Virginians could lose their health insurance coverage between expiration of the enhanced credits and changes to Medicaid that are expected to push people out of the program with a new work requirement and semi-annual review of their eligibility for benefits.

The Congressional Budget Office said Friday that if Congress were to extend the enhanced subsidies permanently, it would increase the number of Americans with health insurance by 3.8 million in 2035. However, the CBO said it also would increase the federal deficit by $350 billion over the same period. The effects on premiums would vary, depending on when Congress acted to extend the subsidies.

Warner and Kaine argued that the CBO analysis "makes plain what we've been warning — these tax credits are the difference between a family being able to afford health insurance or being priced out of coverage entirely."

Rep. Morgan Griffith, R-9th, who represents a heavily Republican district in Southwest Virginia, said he favors "a glide path that protects Americans and recognizes a return to a pre-COVID style Obamacare exchange insurance program," but reminded Democrats that they "created the cliff for these credits" under the American Rescue Plan Act when they controlled Congress.

Rep. Jennifer McClellan, D-4th, who represents Richmond and much of the surrounding area in a heavily Democratic district, blamed Republicans for shutting Democrats out of the process for negotiating a stopgap funding bill.

"As hospitals close, premiums rise and people lose access to health care, we can't afford to sit by and do nothing," McClellan said.

Michael Martz (804) 649-6964 [email protected]